GREECE
http://www.spiked-online.com/index.php/site/article/11390/
http://wallstreetpit.com/85811-a-financial-coup-detat-in-the-making

LIBYA
http://www.deathandtaxesmag.com/97180/goldman-sachs-and-gaddafi-a-splendid-conspiracy/

GOLDMAN SACHS CONQUERS EUROPE
http://www.independent.co.uk/news/business/analysis-and-features/what-price-the-new-democracy-goldman-sachs-conquers-europe-6264091.html
by Stephan Foley / 18 November 2011

The ascension of Mario Monti to the Italian prime ministership is remarkable for more reasons than it is possible to count. By replacing the scandal-surfing Silvio Berlusconi, Italy has dislodged the undislodgeable. By imposing rule by unelected technocrats, it has suspended the normal rules of democracy, and maybe democracy itself. And by putting a senior adviser at Goldman Sachs in charge of a Western nation, it has taken to new heights the political power of an investment bank that you might have thought was prohibitively politically toxic. This is the most remarkable thing of all: a giant leap forward for, or perhaps even the successful culmination of, the Goldman Sachs Project.

It is not just Mr Monti. The European Central Bank, another crucial player in the sovereign debt drama, is under ex-Goldman management, and the investment bank’s alumni hold sway in the corridors of power in almost every European nation, as they have done in the US throughout the financial crisis. Until Wednesday, the International Monetary Fund’s European division was also run by a Goldman man, Antonio Borges, who just resigned for personal reasons. Even before the upheaval in Italy, there was no sign of Goldman Sachs living down its nickname as “the Vampire Squid”, and now that its tentacles reach to the top of the eurozone, sceptical voices are raising questions over its influence. The political decisions taken in the coming weeks will determine if the eurozone can and will pay its debts – and Goldman’s interests are intricately tied up with the answer to that question.

Simon Johnson, the former International Monetary Fund economist, in his book 13 Bankers, argued that Goldman Sachs and the other large banks had become so close to government in the run-up to the financial crisis that the US was effectively an oligarchy. At least European politicians aren’t “bought and paid for” by corporations, as in the US, he says. “Instead what you have in Europe is a shared world-view among the policy elite and the bankers, a shared set of goals and mutual reinforcement of illusions.”

This is The Goldman Sachs Project. Put simply, it is to hug governments close. Every business wants to advance its interests with the regulators that can stymie them and the politicians who can give them a tax break, but this is no mere lobbying effort. Goldman is there to provide advice for governments and to provide financing, to send its people into public service and to dangle lucrative jobs in front of people coming out of government. The Project is to create such a deep exchange of people and ideas and money that it is impossible to tell the difference between the public interest and the Goldman Sachs interest.

Mr Monti is one of Italy’s most eminent economists, and he spent most of his career in academia and thinktankery, but it was when Mr Berlusconi appointed him to the European Commission in 1995 that Goldman Sachs started to get interested in him. First as commissioner for the internal market, and then especially as commissioner for competition, he has made decisions that could make or break the takeover and merger deals that Goldman’s bankers were working on or providing the funding for. Mr Monti also later chaired the Italian Treasury’s committee on the banking and financial system, which set the country’s financial policies. With these connections, it was natural for Goldman to invite him to join its board of international advisers. The bank’s two dozen-strong international advisers act as informal lobbyists for its interests with the politicians that regulate its work. Other advisers include Otmar Issing who, as a board member of the German Bundesbank and then the European Central Bank, was one of the architects of the euro. Perhaps the most prominent ex-politician inside the bank is Peter Sutherland, Attorney General of Ireland in the 1980s and another former EU Competition Commissioner. He is now non-executive chairman of Goldman’s UK-based broker-dealer arm, Goldman Sachs International, and until its collapse and nationalisation he was also a non-executive director of Royal Bank of Scotland. He has been a prominent voice within Ireland on its bailout by the EU, arguing that the terms of emergency loans should be eased, so as not to exacerbate the country’s financial woes. The EU agreed to cut Ireland’s interest rate this summer.

Picking up well-connected policymakers on their way out of government is only one half of the Project, sending Goldman alumni into government is the other half. Like Mr Monti, Mario Draghi, who took over as President of the ECB on 1 November, has been in and out of government and in and out of Goldman. He was a member of the World Bank and managing director of the Italian Treasury before spending three years as managing director of Goldman Sachs International between 2002 and 2005 – only to return to government as president of the Italian central bank. Mr Draghi has been dogged by controversy over the accounting tricks conducted by Italy and other nations on the eurozone periphery as they tried to squeeze into the single currency a decade ago. By using complex derivatives, Italy and Greece were able to slim down the apparent size of their government debt, which euro rules mandated shouldn’t be above 60 per cent of the size of the economy. And the brains behind several of those derivatives were the men and women of Goldman Sachs.

The bank’s traders created a number of financial deals that allowed Greece to raise money to cut its budget deficit immediately, in return for repayments over time. In one deal, Goldman channelled $1bn of funding to the Greek government in 2002 in a transaction called a cross-currency swap. On the other side of the deal, working in the National Bank of Greece, was Petros Christodoulou, who had begun his career at Goldman, and who has been promoted now to head the office managing government Greek debt. Lucas Papademos, now installed as Prime Minister in Greece’s unity government, was a technocrat running the Central Bank of Greece at the time. Goldman says that the debt reduction achieved by the swaps was negligible in relation to euro rules, but it expressed some regrets over the deals. Gerald Corrigan, a Goldman partner who came to the bank after running the New York branch of the US Federal Reserve, told a UK parliamentary hearing last year: “It is clear with hindsight that the standards of transparency could have been and probably should have been higher.” When the issue was raised at confirmation hearings in the European Parliament for his job at the ECB, Mr Draghi says he wasn’t involved in the swaps deals either at the Treasury or at Goldman.

It has proved impossible to hold the line on Greece, which under the latest EU proposals is effectively going to default on its debt by asking creditors to take a “voluntary” haircut of 50 per cent on its bonds, but the current consensus in the eurozone is that the creditors of bigger nations like Italy and Spain must be paid in full. These creditors, of course, are the continent’s big banks, and it is their health that is the primary concern of policymakers. The combination of austerity measures imposed by the new technocratic governments in Athens and Rome and the leaders of other eurozone countries, such as Ireland, and rescue funds from the IMF and the largely German-backed European Financial Stability Facility, can all be traced to this consensus. “My former colleagues at the IMF are running around trying to justify bailouts of €1.5trn-€4trn, but what does that mean?” says Simon Johnson. “It means bailing out the creditors 100 per cent. It is another bank bailout, like in 2008: The mechanism is different, in that this is happening at the sovereign level not the bank level, but the rationale is the same.” So certain is the financial elite that the banks will be bailed out, that some are placing bet-the-company wagers on just such an outcome. Jon Corzine, a former chief executive of Goldman Sachs, returned to Wall Street last year after almost a decade in politics and took control of a historic firm called MF Global. He placed a $6bn bet with the firm’s money that Italian government bonds will not default. When the bet was revealed last month, clients and trading partners decided it was too risky to do business with MF Global and the firm collapsed within days. It was one of the ten biggest bankruptcies in US history.

The grave danger is that, if Italy stops paying its debts, creditor banks could be made insolvent. Goldman Sachs, which has written over $2trn of insurance, including an undisclosed amount on eurozone countries’ debt, would not escape unharmed, especially if some of the $2trn of insurance it has purchased on that insurance turns out to be with a bank that has gone under. No bank – and especially not the Vampire Squid – can easily untangle its tentacles from the tentacles of its peers. This is the rationale for the bailouts and the austerity, the reason we are getting more Goldman, not less. The alternative is a second financial crisis, a second economic collapse. Shared illusions, perhaps? Who would dare test it?

Mario Monti, Lucas Papademos and Mario Draghi have something in common: they have all worked for the American investment bank. This is not a coincidence, but evidence of a strategy to exert influence that has perhaps already reached its limits.

a ‘FRATERNAL ASSOCIATION’
http://www.presseurop.eu/en/content/article/1177241-our-friends-goldman-sachs
Our friends from Goldman Sachs…
by Marc Roche / 16 November 2011 / Le Monde

Serious and competent, they weigh up the pros and cons and study all of the documents before giving an opinion. They have a fondness for economics, but these luminaries who enter into the temple only after a long and meticulous recruitment process prefer to remain discreet. Collectively they form an entity that is part pressure group, part fraternal association for the collection of information, and part mutual aid network. They are the craftsmen, masters and grandmasters whose mission is “to spread the truth acquired in the lodge to the rest of the world.” According to its detractors, the European network of influence woven by American bank Goldman Sachs (GS) functions like a freemasonry. To diverse degrees, the new European Central Bank President, Mario Draghi, the newly designated Prime Minister of Italy, Mario Monti, and the freshly appointed Greek Prime Minister Lucas Papademos are totemic figures in this carefully constructed web.

Heavyweight members figure large in the euro crisis
Draghi was Goldman Sachs International’s vice-chairman for Europe between 2002 and 2005, a position that put him in charge of the the “companies and sovereign” department, which shortly before his arrival, helped Greece to disguise the real nature of its books with a swap on its sovereign debt. Monti was an international adviser to Goldman Sachs from 2005 until his nomination to lead the Italian government. According to the bank, his mission was to provide advice “on European business and major public policy initiatives worldwide”. As such, he was a “door opener” with a brief to defend Goldman’s interest in the corridors of power in Europe. The third man, Lucas Papademos, was the governor of the Greek central bank from 1994 to 2002. In this capacity, he played a role that has yet to be elucidated in the operation to mask debt on his country’s books, perpetrated with assistance from Goldman Sachs. And perhaps more importantly, the current chairman of Greece’s Public Debt Management Agency, Petros Christodoulos, also worked as a trader for the bank in London. Two other heavyweight members of Goldman’s European network have also figured large in the euro crisis: Otmar Issing, a former member of the Bundesbank board of directors and a one-time chief economist of the European Central Bank, and Ireland’s Peter Sutherland, an administrator for Goldman Sachs International, who played a behind the scenes role in the Irish bailout.

Relay exclusive information to the bank’s trading rooms
How was this loyal network of intermediaries created? The US version of this magic circle is composed of former highly placed executives of the bank who effortlessly enter the highest level of the civil service. In Europe, on the other hand, Goldman Sachs has worked to accumulate a capital of relationships. But unlike its competitors, the bank has no interest in retired diplomats, highly placed national and international civil servants, or even former prime ministers and ministers of finance. Goldman’s priority has been to target central bankers and former European commissioners. Its main goal is to legally collect information on initiatives in the near future and on the interest rates set by central banks. At the same time, Goldman likes its agents to remain discreet. That is why its loyal subjects prefer not to mention their filiation in interviews or in the course of official missions. These well-connected former employees simply have to talk about this and that secure in the knowledge that their prestige will inevitably be rewarded with outspoken frankness on the part of those in powerful positions. Put simply they are there to see “which way the wind is blowing,” and thereafter to relay exclusive information to the bank’s trading rooms.

Bid for global dominance
Now that it has a former director at the head of the ECB, a former intermediary leading the Italian government, and another in charge in Greece, the bank’s antagonists are eager to highlight the extraordinary power of its network in in Frankfurt, Rome and Athens, which could prove extremely useful in these turbulent times. But looking beyond these details, the power of Goldman’s European government before and during the financial ordeal of 2008 may well prove to be an obstacle. The relationships maintained by experienced former central bankers are less likely to be useful now that politicians are aware of the unpopularity of finance professionals who are seen to be responsible for the present crisis. Where Goldman Sachs used to be able to exercise its talents, it now has to contend with opposition from public authorities raising questions about a series of scandals. A well stocked address book is no longer sufficient in a complex and highly technical financial world, where a new generation of industry leaders are less likely to be imbued with an unquestioning respect for the establishment. In their bid for global dominance, they no longer need to rely on high finance crusaders in the Goldman mould, while the quest to protect shareholder’s rights, demands for more transparency and active opposition from the media, NGOs, and institutional investors continue to erode the potency of “the network effect.”

{Translated from the French by Mark McGovern}

The giant American investment bank which is accused of helping the Greek state to conceal the real nature of its financial situation while speculating on its debts can count on a remarkable network of advisers with very close links to European leaders, reports Le Monde.

“GOVERNMENT SACHS”
http://www.presseurop.eu/en/content/article/1177241-our-friends-goldman-sachs
Goldman Sachs, the international web
by Marc Roche / 3 March 2010 / Le Monde

Petros Christodoulou affects not to care about compliments or their source. Ever since he was a teenager, this top-of-the-class student has grown used to hearing his praises sung. Appointed on 19 February to the head of the organization for the management of Greek public debt, he has arrived at the top of the tree. However, the trouble is that the former manager of global markets at the National Bank of Greece (NBG) is at the centre of an inquiry, announced on 25 February by the United States Federal Reserve, on contracts relating to Greek national debt, which link Goldman Sachs and other companies to the government in Athens. The New York based investment bank was paid as a banking advisor to the Greek government while speculating on the Hellenic nation’s sovereign debt. In particular, the American regulator is interested in the role played by Petros Christodoulou, who, in collaboration with Goldman, supervised the creation of the London company Titlos to transfer debt from Greece’s national accounts to the NBG. Before joining the NBG in 1998, Mr Christodoulou had worked as a banker for – you guessed it – Goldman Sachs.

“Government Sachs”
The affair has highlighted the powerful network of influence that Goldman Sachs has maintained in Europe since 1985 – a tightly woven group of underground and high-profile go-betweens and loyal supporters, whose address books open the doors of ministries of finance. These carefully recruited and extraordinarily well-paid advisors understand all the subtleties of the corridors of power within the European Union, and have a direct line to decision makers that they can call during moments of crisis. But who are the members of the European arm of the institution which is so powerful in Washington that it is referred to as “government Sachs”? The key figure is Peter Sutherland, chairman of Goldman Sachs International, the bank’s London-based European subsidiary. The former European commissioner for competition and ex-chairman of BP, is an essential link between the investment bank and the 27 EU member states and Russia. In France, Goldman Sachs benefits from the support of Charles de Croisset, a former chairman of Crédit Commercial de France (CCF), who took over from Jacques Mayoux, a government inspector of finances and former chairman of Société Générale. In the United Kingdom, it can count on Lord Griffiths, who advised former prime minister Margaret Thatcher, and in Germany, on Otmar Issing, a one-time board member of the Bundesbank and ex-chief economist of the European Central Bank (ECB).

Discreetly advances its interests
And that is not to mention the many Goldman alumni who go onto hold positions of power, which the bank can count on to advance its position. The best known of these is Mario Draghi, Goldman’s vice-president for Europe between 2001 and 2006, who is the current governor of the Bank of Italy and Chairman of international regulator, the Financial Stability Board. But do not expect to come across former diplomats in the austere corridors of Goldman Sachs International. As an institution with real world interests, the bank prefers to recruit financiers, economists, central bankers, and former highly placed civil servants from international economic organizations, but considers retired ambassadors to be jovial status symbols without any real high-level contacts or business sense. For Goldman Sachs, this network has the advantage of enabling it to discreetly advance its interests. In the Financial Times of 15 February, Otmar Issing published an article voicing his hostility to any attempt by the European Union to rescue Greece. However, he omitted to mention the fact that he has been an international advisor to Goldman Sachs since 2006. Nor did he say that the bank’s traders, who have been speculating against the single European currency, might well lose their shirts if the EU does intervene.


Max Keiser & Catherine Austin Fitts on Goldman Sachs (2009)

$7 TRILLION in SECRET LOANS
http://www.slate.com/articles/business/moneybox/2011/11/the_7_trillion_secret_loan_program_the_government_and_big_banks_should_be_punished_for_deceiving_the_public_about_their_hush_hush_bailout_scheme_.html
The government and the big banks deceived the public about their $7 trillion secret loan program. They should be punished
by Eliot Spitzer  /   Nov. 30, 2011

Imagine you walked into a bank, applied for a personal line of credit, and filled out all the paperwork claiming to have no debts and an income of $200,000 per year. The bank, based on these representations, extended you the line of credit. Then, three years later, after fighting disclosure all the way, you were forced by a court to tell the truth: At the time you made the statements to the bank, you actually were unemployed, you had a $1 million mortgage on your house on which you had failed to make payments for six months, and you hadn’t paid even the minimum on your credit-card bills for three months. Do you think the bank would just say: Never mind, don’t worry about it? Of course not. Whether or not you had paid back the personal line of credit, three FBI agents would be at your door within hours. Yet this is exactly what the major American banks have done to the public. During the deepest, darkest period of the financial cataclysm, the CEOs of major banks maintained in statements to the public, to the market at large, and to their own shareholders that the banks were in good financial shape, didn’t want to take TARP funds, and that the regulatory framework governing our banking system should not be altered. Trust us, they said. Yet, unknown to the public and the Congress, these same banks had been borrowing massive amounts from the government to remain afloat. The total numbers are staggering: $7.7 trillion of credit—one-half of the GDP of the entire nation. $460 billion was lent to J.P. Morgan, Bank of America, Citibank, Wells Fargo, Goldman Sachs, and Morgan Stanley alone—without anybody other than a few select officials at the Fed and the Treasury knowing. This was perhaps the single most massive allocation of capital from public to private hands in our history, and nobody was told. This was not TARP: This was secret Fed lending. And although it has since been repaid, it is clear why the banks didn’t want us to know about it: They didn’t want to admit the magnitude of their financial distress.

The banks’ claims of financial stability and solvency appear at a minimum to have been misleading—and may have been worse. Misleading statements and deception of this sort would ordinarily put a small-market player or borrower on the wrong end of a criminal investigation. So where are the inquiries into the false statements made by the bank CEOs? And where are the inquiries about the Fed and Treasury officials who stood by silently as bank representatives made claims that were false, misleading, or worse? Only now, because of superb analysis done by Bloomberg reporters—who litigated against the Fed and the banks for years to get the information—are we getting a full picture of the Fed and Treasury lending. The reporters also calculated that recipient banks and other borrowers benefited by approximately $13 billion simply by taking advantage of the “spread” between their cost of capital in these almost interest-free loans and their ability to lend the capital.

In addition to the secrecy, what is appalling is that these loans were made with no strings attached, no conditions, and no negotiation to achieve any broader public purpose. Even if one accepts the notion that the stability of the financial system could not be sacrificed, those who dispensed trillions of dollars to private parties made no apparent effort to impose even minimal obligations to condition the loans on the structural reforms needed to prevent another crisis, made no effort to require that those responsible for creating the crisis be relieved of their jobs, took zero steps towards the genuine mortgage-reform that is so necessary to begin a process of economic renewal. The dollars lent were simply a free bridge loan so the banks could push onto others the responsibility for the banks’ own risk-taking. If ever there was an event to justify the darkest, most conspiratorial view held by many that the alliance of big money on Wall Street and big government produces nothing but secret deals that profit insiders—this is it.

So what to do? The revelations of the secret loan program may provide the opportunity for Occupy Wall Street to suggest a few concrete steps that would be difficult to oppose.

First: Demand a hearing where the bank executives have to answer questions—under oath—about the actual negotiations, or lack thereof, that led to these loans; about the actual condition of each of the borrowing banks and whether that condition differed from the public statements made by the banks at the time.

Second: Require the recipient banks to use this previously undisclosed gift—the profit they made by investing this almost interest-free money—to write down the value of mortgages of those who are underwater. The loans to the banks were meant to solve a short-term liquidity problem, not be a source of profits to fund bonuses. Take back the profits and put them to apublic use.

Third: Require the government officials responsible for authorizing these loans to explain why there was no effort made to condition these loans on changes in policy that would protect the public going forward.

Fourth: Ask congress to examine every filing and statement made to Congress by the banks about their financial condition and their indebtedness to see if any misrepresentations were made in an effort to hide these trillions of dollars of loans. Misleading Congress can be a felony, and willful deception of the Congress to hide the magnitude of the public bailouts should not go unprosecuted.

Finally: Demand that politicians return all contributions made by the institutions that got hidden loans. Pressure the politicians who continue to feed from the trough of Wall Street, even as they know all too well how the banks and others have gamed the system and the public.

“RESCUE”
http://www.nomiprins.com/thoughts/2011/11/30/the-feds-european-rescue-another-back-door-us-bank-goldman-b.html
The Fed’s European “Rescue”: Another back-door US Bank / Goldman bailout?
by Nomi Prins /  November 30, 2011

In the wake of chopping its Central Bank swap rates today, the Fed has been called a bunch of names: a hero for slugging the big bailout bat in the ninth inning, and a villain for printing money to help Europe at the expense of the US. Neither depiction is right. The Fed is merely continuing its unfettered brand of bailout-economics, promoted with heightened intensity recently by President Obama and Treasury Secretary, Tim Geithner in the wake of Germany not playing bailout-ball.  Recall, a couple years ago, it was a uniquely American brand of BIG bailouts that the Fed adopted in creating $7.7 trillion of bank subsidies that ran the gamut from back-door AIG bailouts (some of which went to US / some to European banks that deal with those same US banks), to the purchasing of mortgage-backed–securities, to near zero-rate loans (for banks). Similarly, today’s move was also about protecting US banks from losses – self inflicted by dangerous derivatives-chain trades, again with each other, and with European banks. Before getting into the timing of the Fed’s god-father actions, let’s discuss its two kinds of swaps (jargon alert – a swap is a trade between two parties for some time period – you swap me a sweater for a hat because I’m cold, when I’m warmer, we’ll swap back). The Fed had both of these kinds of swaps set up and ready-to-go in the form of : dollar liquidity swap lines and foreign currency liquidity swap lines. Both are administered through Wall Street’s staunchest ally, and Tim Geithner’s old stomping ground, the New York Fed.

The dollar swap lines give foreign central banks the ability to borrow dollars against their currency, use them for whatever they want – like to shore up bets made by European banks that went wrong, and at a later date, return them. A ‘temporary dollar liquidity swap arrangement” with 14 foreign central banks was available between December 12, 2007 (several months before Bear Stearn’s collapse and 9 months before the Lehman Brothers’ bankruptcy that scared Goldman Sachs and Morgan Stanley into getting the Fed’s instant permission to become bank holding companies, and thus gain access to any Feds subsidies.) Those dollar-swap lines ended on February 1, 2010. BUT – three months later, they were back on, but this time the FOMC re-authorized dollar liquidity swap lines with only 5 central banks through January 2011. BUT – on December 21, 2010 – the FOMC extended the lines through August 1, 2011. THEN– on June 29th, 2011, these lines were extended through August 1, 2012.  AND NOW – though already available, they were announced with save-the-day fanfare as if they were just considered.

Then, there are the sneakily-dubbed “foreign currency liquidity swap” lines, which, as per the Fed’s own words, provide “foreign currency-denominated liquidity to US banks.” (Italics mine.) In other words, let US banks play with foreign bonds. These were originally used with 4 foreign banks on April, 2009  and expired on February 1, 2010. Until they were resurrected today, November 30, 2011, with foreign currency swap arrangements between the Fed, Bank of Canada, Bank of England, Bank of Japan. Swiss National Bank and the European Central Bank. They are to remain in place until February 1, 2013, longer than the original time period for which they were available during phase one of the global bank-led meltdown, the US phase. (For those following my work, we are in phase two of four, the European phase.) That’s a lot  of jargon, but keep these two things in mind: 1) these lines, by the Fed’s own words, are to provide help to US banks. and 2) they are open ended.

There are other reasons that have been thrown up as to why the Fed acted now – like, a European bank was about to fail. But, that rumor was around in the summer and nothing happened. Also, dozens of European banks have been downgraded, and several failed stress tests. Nothing. The Fed didn’t step in when it was just Greece –or Ireland  – or when there were rampant ‘contagion’ fears, and Italian bonds started trading above 7%, rising unabated despite the trick of former Goldman Sachs International advisor Mario Monti replacing former Prime Minister, Silvio Berlusconi’s with his promises of fiscally conservative actions (read: austerity measures) to come. Perhaps at that point, Goldman thought they had it all under control, but Germany’s bailout-resistence was still a thorn, which is why its bonds got hammered in the last auction, proving that big Finance will get what it wants, no matter how dirty it needs to play.  Nothing from the Fed, except a small increase in funding to the IMF. Rating agency Moody’s  announced it was looking at possibly downgrading 87 European banks. Still the Fed waited with open lines. And then, S&P downgraded the US banks again, including Goldman ,making their own financing costs more expensive and the funding of their seismic derivatives positions more tenuous. The Fed found the right moment. Bingo.

Now, consider this: the top four US banks (JPM Chase, Citibank, Bank of America and Goldman Sachs) control nearly 95% of the US derivatives market, which has grown by 20% since last year to  $235 trillion. That figure is a third of all global derivatives of $707 trillion (up from $601 trillion in December, 2010 and $583 trillion mid-year 2010. )

Breaking that down:  JPM Chase holds 11% of the world’s derivative exposure, Citibank, Bank of America, and Goldman comprise about 7% each. But, Goldman has something the others don’t – a lot fewer assets beneath its derivatives stockpile. It has 537 times as many (from 440 times last year) derivatives as assets. Think of a 537 story skyscraper on a one story see-saw. Goldman has $88 billon in assets, and $48 trillion in notional derivatives exposure. This is by FAR the highest ratio of derivatives to assets of any so-called bank backed by a government. The next highest ratio belongs to Citibank with $1.2 trillion in assets and $56 trillion in derivative exposure, or 46 to 1. JPM Chase’s ratio is 44 to 1. Bank of America’s ratio is 36 to 1. Separately Goldman happened to have lost a lot of money in Foreign Exchange derivative positions last quarter. (See Table 7.) Goldman’s loss was about equal to the total gains of the other banks, indicative of some very contrarian trade going on. In addition, Goldman has the most credit risk with respect to the capital  it holds, by a factor of 3 or 4 to 1 relative to the other big banks. So did the Fed’s timing have something to do with its star bank? We don’t really know for sure.

Sadly, until there’s another FED audit, or FOIA request, we’re not going to know which banks are the beneficiaries of the Fed’s most recent international largesse either, nor will we know what their specific exposures are to each other, or to various European banks, or which trades are going super-badly. But we do know from the US bailouts in phase one of the global meltdown, that providing ‘liquidity’ or ‘greasing the wheels of ‘ banks in times of ‘emergency’ does absolute nothing for the Main Street Economy. Not in the US. And not in Europe. It also doesn’t fix anything, it just funds bad trades with impunity.

LEVERAGE
http://www.nomiprins.com/thoughts/2011/11/21/as-the-world-crumbles-the-ecb-spins-fed-smirks-and-us-banks.html
As the World Crumbles: the ECB spins, FED smirks, and US Banks Pillage
by Nomi Prins / November 21, 2011

Often, when I troll around websites of entities like the ECB and IMF, I uncover little of startling note. They design it that way. Plus, the pace at which the global financial system can leverage bets, eviscerate capital, and cry for bank bailouts financed through austerity measures far exceeds the reporting timeliness of these bodies. That’s why, on the center of the ECB’s homepage, there’s a series of last week’s rates – and this relic – an interactive Inflation Game (I kid you not)  where in 22 different languages you can play the game of what happens when inflation goes up and down. If you’re feeling more adventurous, there’s also a game called Economia, where you can make up unemployment rates, growth rates and interest rates and see what happens. What you can’t do is see what happens if you bet trillions of dollars against various countries to see how much you can break them, before the ECB, IMF, or Fed (yes, it’ll happen) swoops in to provide “emergency” loans in return for cuts to pension funds, social programs, and national ownership of public assets. You also can’t input real world scenarios, where monetary policy doesn’t mean a thing in the face of  tidal waves of derivatives’ flow. You can’t gauge say, what happens if Goldman Sachs bets $20 billion in leveraged credit default swaps against Greece, and offsets them (partially) with JPM Chase which bets $20 billion, and offsets that with Bank of America, and then MF Global (oops) and then…..you see where I’m going with this.

We’re doomed if even their board games don’t come close to mimicking the real situation in Europe, or in the US, yet they supply funds to banks torpedoing local populations with impunity. These central entities also don’t bother to examine (or notice) the intermingled effect of leveraged derivatives and debt transactions per country; which is why no amount of funding from the ECB, or any other body, will be able to stay ahead of the hot money racing in and out of various countries.  It’s not about inflation – it’s about the speed, leverage, and daring of capital flow, that has its own power to select winners and losers. It’s not the ‘inherent’ weakness of national economies that a few years ago were doing fine, that’s hurting the euro. It’s the external bets on their success, failure, or economic capitulation running the show. Similarly, the US economy was doing much better before banks starting leveraging the hell out of our subprime market through a series of toxic, fraudulent, assets.

Elsewhere in my trolling, I came across a gem of a working paper on the IMF website, written by Ashoka Mody and Damiano Sandri,  entitled ‘The Eurozone Crisis; How Banks and Sovereigns Came to be Joined at the Hip” (The paper does not ‘necessarily represent the views of the IMF or IMF policy’.) The paper is full of mathematical formulas and statistical jargon, which may be why the media didn’t pick up on it, but hey, I got a couple of degrees in Mathematics and Statistics, so I went all out.  And it’s fascinating stuff. Basically, it shows that between the advent of the euro in 1999, and 2007, spreads between the bonds of peripheral countries and core ones in Europe were pretty stable. In other words, the risk of any country defaulting on its debt was fairly equal, and small. But after the 2007 US subprime asset crisis, and more specifically, the advent of  Federal Reserve / Treasury Department construed bailout-economics, all hell broke loose – international capital went AWOL daring default scenarios, targeting them for future bailouts, and when money leaves a country faster than it entered, the country tends to falter economically. The cycle is set.

The US subprime crisis wasn’t so much about people defaulting on loans, but the mega-magnified effects of those defaults on a $14 trillion asset pyramid created by the banks. (Those assets were subsequently sold, and used as collateral for other borrowing and esoteric derivatives combinations, to create a global $140 trillion debt binge.) As I detail in It Takes Pillage, the biggest US banks manufactured more than 75% of those $14 trillion of assets. A significant portion was sold in Europe – to local banks, municipalities, and pension funds – as lovely AAA morsels against which more debt, or leverage, could be incurred. And even thought the assets died, the debts remained.

Greek banks bought US-minted AAA assets and leveraged them. Norway did too (through the course of working on a Norwegian documentary, I discovered that 8 tiny towns in Norway bought $200 million of junk assets from Citigroup, borrowed money from local banks to pay for them, and pledged 10 years of power receipts from hydroelectric plants in return. The AAA assets are now worth zero, the power has been curtailed for residents, and the Norwegian banks want their money back–blood from a stone.) The same kind of thing happend in Italy, Spain, Portugal, Ireland, Holland, France, and even Germany – in different degrees and with specific national issues mixed in.  Problem is – when you’ve already used worthless collateral to borrow tons of money you won’t ever be able to repay, and international capital slams you in other ways, and your funding costs rise, and your internal development and lending seize up, you’re screwed – or rather the people in your country are screwed.

In the IMF paper, the authors convincingly make the case that it wasn’t just the US subprime asset meltdown itself that initiated Europe’s implosion, but the fact that our Federal Reserve and Treasury Department adopted a reckless don’t-let-em-fail doctrine. Even though Bear Stearns and Lehman Brothers failed, their investors, the huge ones anyway, were protected. The Fed subsidized, and still subsidizes, $29 billion of risk for JPM Chase’s acquisition of Bear. The philosophy of saving banks and their practices poisoned Europe, as those same financial firms played euro-roulette in the global derivatives markets, once the subprime betting train slowed down.

The first fatal stop of the US bailout mentaility was the ECB’s 2010 bailout of Anglo Irish bank, which got the lion’s share of the ECB’s Irish-bailout: $51 billion euro of ELA (Emergency Loan Assistance) and $100 billion euro of regular lending at the time. After the international financial community saw the pace and volume of Irish bank bailouts, the game of euro-roulette went turbo, country by country.  More ‘fiscally conservative’ governments are replacing any semblance of population-supportive ones. The practice of  extracting ‘fiscal prudency’ from people and providing bank subsidies for bets gone wrong has infected all of Europe. It will continue to do so, because anything less will threathen the entire Euro experiement, plus otherwise, the US banks might be on the hook again for losses, and the Fed and Treasury won’t let that happen. They’ve already demonstrated that. It’d be just sooo catastrophic.

In the wings, the smugness of Treasury Secretary Tim Geithner and Fed Chairman, Ben Bernanke is palpable – ‘hey, we acted heroically and “decisively” to provide a multi-trillion dollar smorgasbord  of subsidies for our biggest banks and look how great we  (er, they) are doing now? Seriously, Europe – get your act together already, don’t do the trickle-bailout game – just dump a boatload of money into the same banks – and a few of your own before they go under  – do it for the sake of global economic stability. It’ll really work. Trust us.’ Most of the media goes along with the notion that US banks exposed to the ‘euro-contagion’ will hurt our (nonexistent) recovery. US Banks assure us, they don’t have much exposure – it’s all hedged. (Like it was all AAA.) The press doesn’t tend to question the global harm caused by never having smacked US banks into place, cutting off their money supply, splitting them into commercial and speculative parts ala Glass-Steagall and letting the speculative parts that should have died, die, rather than enjoy public subsidization and the ability to go globe-hopping for more destructive opportunity, alongside some of the mega-global bank partners.

Today, the stock prices of the largest US banks are about as low as they were in the early part of 2009, not because of euro-contagion or Super-committee super-incompetence (a useless distraction anyway) but because of the ongoing transparency void surrouding the biggest banks amidst their central-bank-covered risks, and the political hot potato of how many emergency loans are required to keep them afloat at any given moment.  Because investors don’t know their true exposures, any more than in early 2009. Because US banks catalyzed the global crisis that is currently manifesting itself in Europe. Because there never was a separate US housing crisis and European debt crisis. Instead, there is a worldwide, systemic, unregulated, uncontained,  rapacious need for the most powerful banks and financial institutions to leverage whatever could be leveraged in whatever forms it could be leveraged in. So, now we’re just barely in the second quarter of the game of thrones, where the big banks are the kings, the ECB, IMF and the Fed are the money supply, and the populations are the powerless serfs. Yeah, let’s play the ECB inflation game, while the world crumbles.

MEANWHILE:
the WORLD ACCORDING to GOLDMAN SACHS
http://www.bloomberg.com/news/2011-11-28/secret-fed-loans-undisclosed-to-congress-gave-banks-13-billion-in-income.html
Secret Fed Loans Gave Banks $13 Billion Undisclosed to Congress
by Bob Ivry, Bradley Keoun and Phil Kuntz   /  Nov 27, 2011

The Federal Reserve and the big banks fought for more than two years to keep details of the largest bailout in U.S. history a secret. Now, the rest of the world can see what it was missing. The Fed didn’t tell anyone which banks were in trouble so deep they required a combined $1.2 trillion on Dec. 5, 2008, their single neediest day. Bankers didn’t mention that they took tens of billions of dollars in emergency loans at the same time they were assuring investors their firms were healthy. And no one calculated until now that banks reaped an estimated $13 billion of income by taking advantage of the Fed’s below-market rates, Bloomberg Markets magazine reports in its January issue. Saved by the bailout, bankers lobbied against government regulations, a job made easier by the Fed, which never disclosed the details of the rescue to lawmakers even as Congress doled out more money and debated new rules aimed at preventing the next collapse. A fresh narrative of the financial crisis of 2007 to 2009 emerges from 29,000 pages of Fed documents obtained under the Freedom of Information Act and central bank records of more than 21,000 transactions. While Fed officials say that almost all of the loans were repaid and there have been no losses, details suggest taxpayers paid a price beyond dollars as the secret funding helped preserve a broken status quo and enabled the biggest banks to grow even bigger.

‘Change Their Votes’
“When you see the dollars the banks got, it’s hard to make the case these were successful institutions,” says Sherrod Brown, a Democratic Senator from Ohio who in 2010 introduced an unsuccessful bill to limit bank size. “This is an issue that can unite the Tea Party and Occupy Wall Street. There are lawmakers in both parties who would change their votes now.” The size of the bailout came to light after Bloomberg LP, the parent of Bloomberg News, won a court case against the Fed and a group of the biggest U.S. banks called Clearing House Association LLC to force lending details into the open. The Fed, headed by Chairman Ben S. Bernanke, argued that revealing borrower details would create a stigma — investors and counterparties would shun firms that used the central bank as lender of last resort — and that needy institutions would be reluctant to borrow in the next crisis. Clearing House Association fought Bloomberg’s lawsuit up to the U.S. Supreme Court, which declined to hear the banks’ appeal in March 2011.

$7.77 Trillion
The amount of money the central bank parceled out was surprising even to Gary H. Stern, president of the Federal Reserve Bank of Minneapolis from 1985 to 2009, who says he “wasn’t aware of the magnitude.” It dwarfed the Treasury Department’s better-known $700 billion Troubled Asset Relief Program, or TARP. Add up guarantees and lending limits, and the Fed had committed $7.77 trillion as of March 2009 to rescuing the financial system, more than half the value of everything produced in the U.S. that year. “TARP at least had some strings attached,” says Brad Miller, a North Carolina Democrat on the House Financial Services Committee, referring to the program’s executive-pay ceiling. “With the Fed programs, there was nothing.” Bankers didn’t disclose the extent of their borrowing. On Nov. 26, 2008, then-Bank of America (BAC) Corp. Chief Executive Officer Kenneth D. Lewis wrote to shareholders that he headed “one of the strongest and most stable major banks in the world.” He didn’t say that his Charlotte, North Carolina-based firm owed the central bank $86 billion that day.

‘Motivate Others’
JPMorgan Chase & Co. CEO Jamie Dimon told shareholders in a March 26, 2010, letter that his bank used the Fed’s Term Auction Facility “at the request of the Federal Reserve to help motivate others to use the system.” He didn’t say that the New York-based bank’s total TAF borrowings were almost twice its cash holdings or that its peak borrowing of $48 billion on Feb. 26, 2009, came more than a year after the program’s creation. Howard Opinsky, a spokesman for JPMorgan (JPM), declined to comment about Dimon’s statement or the company’s Fed borrowings. Jerry Dubrowski, a spokesman for Bank of America, also declined to comment. The Fed has been lending money to banks through its so- called discount window since just after its founding in 1913. Starting in August 2007, when confidence in banks began to wane, it created a variety of ways to bolster the financial system with cash or easily traded securities. By the end of 2008, the central bank had established or expanded 11 lending facilities catering to banks, securities firms and corporations that couldn’t get short-term loans from their usual sources.

‘Core Function’
“Supporting financial-market stability in times of extreme market stress is a core function of central banks,” says William B. English, director of the Fed’s Division of Monetary Affairs. “Our lending programs served to prevent a collapse of the financial system and to keep credit flowing to American families and businesses.” The Fed has said that all loans were backed by appropriate collateral. That the central bank didn’t lose money should “lead to praise of the Fed, that they took this extraordinary step and they got it right,” says Phillip Swagel, a former assistant Treasury secretary under Henry M. Paulson and now a professor of international economic policy at the University of Maryland. The Fed initially released lending data in aggregate form only. Information on which banks borrowed, when, how much and at what interest rate was kept from public view. The secrecy extended even to members of President George W. Bush’s administration who managed TARP. Top aides to Paulson weren’t privy to Fed lending details during the creation of the program that provided crisis funding to more than 700 banks, say two former senior Treasury officials who requested anonymity because they weren’t authorized to speak.

Big Six
The Treasury Department relied on the recommendations of the Fed to decide which banks were healthy enough to get TARP money and how much, the former officials say. The six biggest U.S. banks, which received $160 billion of TARP funds, borrowed as much as $460 billion from the Fed, measured by peak daily debt calculated by Bloomberg using data obtained from the central bank. Paulson didn’t respond to a request for comment. The six — JPMorgan, Bank of America, Citigroup Inc. (C)Wells Fargo & Co. (WFC)Goldman Sachs Group Inc. (GS) and Morgan Stanley — accounted for 63 percent of the average daily debt to the Fed by all publicly traded U.S. banks, money managers and investment- services firms, the data show. By comparison, they had about half of the industry’s assets before the bailout, which lasted from August 2007 through April 2010. The daily debt figure excludes cash that banks passed along to money-market funds.

Bank Supervision
While the emergency response prevented financial collapse, the Fed shouldn’t have allowed conditions to get to that point, says Joshua Rosner, a banking analyst with Graham Fisher & Co. in New York who predicted problems from lax mortgage underwriting as far back as 2001. The Fed, the primary supervisor for large financial companies, should have been more vigilant as the housing bubble formed, and the scale of its lending shows the “supervision of the banks prior to the crisis was far worse than we had imagined,” Rosner says. Bernanke in an April 2009 speech said that the Fed provided emergency loans only to “sound institutions,” even though its internal assessments described at least one of the biggest borrowers, Citigroup, as “marginal.” On Jan. 14, 2009, six days before the company’s central bank loans peaked, the New York Fed gave CEO Vikram Pandit a report declaring Citigroup’s financial strength to be “superficial,” bolstered largely by its $45 billion of Treasury funds. The document was released in early 2011 by the Financial Crisis Inquiry Commission, a panel empowered by Congress to probe the causes of the crisis.

‘Need Transparency’
Andrea Priest, a spokeswoman for the New York Fed, declined to comment, as did Jon Diat, a spokesman for Citigroup. “I believe that the Fed should have independence in conducting highly technical monetary policy, but when they are putting taxpayer resources at risk, we need transparency and accountability,” says Alabama Senator Richard Shelby, the top Republican on the Senate Banking Committee. Judd Gregg, a former New Hampshire senator who was a lead Republican negotiator on TARP, and Barney Frank, a Massachusetts Democrat who chaired the House Financial Services Committee, both say they were kept in the dark. “We didn’t know the specifics,” says Gregg, who’s now an adviser to Goldman Sachs. “We were aware emergency efforts were going on,” Frank says. “We didn’t know the specifics.”

Disclose Lending
Frank co-sponsored the Dodd-Frank Wall Street Reform and Consumer Protection Act, billed as a fix for financial-industry excesses. Congress debated that legislation in 2010 without a full understanding of how deeply the banks had depended on the Fed for survival. It would have been “totally appropriate” to disclose the lending data by mid-2009, says David Jones, a former economist at the Federal Reserve Bank of New York who has written four books about the central bank. “The Fed is the second-most-important appointed body in the U.S., next to the Supreme Court, and we’re dealing with a democracy,” Jones says. “Our representatives in Congress deserve to have this kind of information so they can oversee the Fed.” The Dodd-Frank law required the Fed to release details of some emergency-lending programs in December 2010. It also mandated disclosure of discount-window borrowers after a two- year lag.

Protecting TARP
TARP and the Fed lending programs went “hand in hand,” says Sherrill Shaffer, a banking professor at the University of Wyoming in Laramie and a former chief economist at the New York Fed. While the TARP money helped insulate the central bank from losses, the Fed’s willingness to supply seemingly unlimited financing to the banks assured they wouldn’t collapse, protecting the Treasury’s TARP investments, he says. “Even though the Treasury was in the headlines, the Fed was really behind the scenes engineering it,” Shaffer says. Congress, at the urging of Bernanke and Paulson, created TARP in October 2008 after the bankruptcy of Lehman Brothers Holdings Inc. made it difficult for financial institutions to get loans. Bank of America and New York-based Citigroup each received $45 billion from TARP. At the time, both were tapping the Fed. Citigroup hit its peak borrowing of $99.5 billion in January 2009, while Bank of America topped out in February 2009 at $91.4 billion.

No Clue
Lawmakers knew none of this. They had no clue that one bank, New York-based Morgan Stanley (MS), took $107 billion in Fed loans in September 2008, enough to pay off one-tenth of the country’s delinquent mortgages. The firm’s peak borrowing occurred the same day Congress rejected the proposed TARP bill, triggering the biggest point drop ever in the Dow Jones Industrial Average. (INDU) The bill later passed, and Morgan Stanley got $10 billion of TARP funds, though Paulson said only “healthy institutions” were eligible. Mark Lake, a spokesman for Morgan Stanley, declined to comment, as did spokesmen for Citigroup and Goldman Sachs. Had lawmakers known, it “could have changed the whole approach to reform legislation,” says Ted Kaufman, a former Democratic Senator from Delaware who, with Brown, introduced the bill to limit bank size.

Moral Hazard
Kaufman says some banks are so big that their failure could trigger a chain reaction in the financial system. The cost of borrowing for so-called too-big-to-fail banks is lower than that of smaller firms because lenders believe the government won’t let them go under. The perceived safety net creates what economists call moral hazard — the belief that bankers will take greater risks because they’ll enjoy any profits while shifting losses to taxpayers. If Congress had been aware of the extent of the Fed rescue, Kaufman says, he would have been able to line up more support for breaking up the biggest banks. Byron L. Dorgan, a former Democratic senator from North Dakota, says the knowledge might have helped pass legislation to reinstate the Glass-Steagall Act, which for most of the last century separated customer deposits from the riskier practices of investment banking. “Had people known about the hundreds of billions in loans to the biggest financial institutions, they would have demanded Congress take much more courageous actions to stop the practices that caused this near financial collapse,” says Dorgan, who retired in January.

Getting Bigger
Instead, the Fed and its secret financing helped America’s biggest financial firms get bigger and go on to pay employees as much as they did at the height of the housing bubble. Total assets held by the six biggest U.S. banks increased 39 percent to $9.5 trillion on Sept. 30, 2011, from $6.8 trillion on the same day in 2006, according to Fed data. For so few banks to hold so many assets is “un-American,” says Richard W. Fisher, president of the Federal Reserve Bank of Dallas. “All of these gargantuan institutions are too big to regulate. I’m in favor of breaking them up and slimming them down.” Employees at the six biggest banks made twice the average for all U.S. workers in 2010, based on Bureau of Labor Statistics hourly compensation cost data. The banks spent $146.3 billion on compensation in 2010, or an average of $126,342 per worker, according to data compiled by Bloomberg. That’s up almost 20 percent from five years earlier compared with less than 15 percent for the average worker. Average pay at the banks in 2010 was about the same as in 2007, before the bailouts.

‘Wanted to Pretend’
“The pay levels came back so fast at some of these firms that it appeared they really wanted to pretend they hadn’t been bailed out,” says Anil Kashyap, a former Fed economist who’s now a professor of economics at the University of Chicago Booth School of Business. “They shouldn’t be surprised that a lot of people find some of the stuff that happened totally outrageous.” Bank of America took over Merrill Lynch & Co. at the urging of then-Treasury Secretary Paulson after buying the biggest U.S. home lender, Countrywide Financial Corp. When the Merrill Lynch purchase was announced on Sept. 15, 2008, Bank of America had $14.4 billion in emergency Fed loans and Merrill Lynch had $8.1 billion. By the end of the month, Bank of America’s loans had reached $25 billion and Merrill Lynch’s had exceeded $60 billion, helping both firms keep the deal on track.

Prevent Collapse
Wells Fargo bought Wachovia Corp., the fourth-largest U.S. bank by deposits before the 2008 acquisition. Because depositors were pulling their money from Wachovia, the Fed channeled $50 billion in secret loans to the Charlotte, North Carolina-based bank through two emergency-financing programs to prevent collapse before Wells Fargo could complete the purchase. “These programs proved to be very successful at providing financial markets the additional liquidity and confidence they needed at a time of unprecedented uncertainty,” says Ancel Martinez, a spokesman for Wells Fargo. JPMorgan absorbed the country’s largest savings and loan, Seattle-based Washington Mutual Inc., and investment bank Bear Stearns Cos. The New York Fed, then headed by Timothy F. Geithner, who’s now Treasury secretary, helped JPMorgan complete the Bear Stearns deal by providing $29 billion of financing, which was disclosed at the time. The Fed also supplied Bear Stearns with $30 billion of secret loans to keep the company from failing before the acquisition closed, central bank data show. The loans were made through a program set up to provide emergency funding to brokerage firms.

‘Regulatory Discretion’
“Some might claim that the Fed was picking winners and losers, but what the Fed was doing was exercising its professional regulatory discretion,” says John Dearie, a former speechwriter at the New York Fed who’s now executive vice president for policy at the Financial Services Forum, a Washington-based group consisting of the CEOs of 20 of the world’s biggest financial firms. “The Fed clearly felt it had what it needed within the requirements of the law to continue to lend to Bear and Wachovia.” The bill introduced by Brown and Kaufman in April 2010 would have mandated shrinking the six largest firms. “When a few banks have advantages, the little guys get squeezed,” Brown says. “That, to me, is not what capitalism should be.” Kaufman says he’s passionate about curbing too-big-to-fail banks because he fears another crisis.

‘Can We Survive?’
“The amount of pain that people, through no fault of their own, had to endure — and the prospect of putting them through it again — is appalling,” Kaufman says. “The public has no more appetite for bailouts. What would happen tomorrow if one of these big banks got in trouble? Can we survive that?” Lobbying expenditures by the six banks that would have been affected by the legislation rose to $29.4 million in 2010 compared with $22.1 million in 2006, the last full year before credit markets seized up — a gain of 33 percent, according to OpenSecrets.org, a research group that tracks money in U.S. politics. Lobbying by the American Bankers Association, a trade organization, increased at about the same rate, OpenSecrets.org reported. Lobbyists argued the virtues of bigger banks. They’re more stable, better able to serve large companies and more competitive internationally, and breaking them up would cost jobs and cause “long-term damage to the U.S. economy,” according to a Nov. 13, 2009, letter to members of Congress from the FSF. The group’s website cites Nobel Prize-winning economist Oliver E. Williamson, a professor emeritus at the University of California, Berkeley, for demonstrating the greater efficiency of large companies.

‘Serious Burden’
In an interview, Williamson says that the organization took his research out of context and that efficiency is only one factor in deciding whether to preserve too-big-to-fail banks.  “The banks that were too big got even bigger, and the problems that we had to begin with are magnified in the process,” Williamson says. “The big banks have incentives to take risks they wouldn’t take if they didn’t have government support. It’s a serious burden on the rest of the economy.” Dearie says his group didn’t mean to imply that Williamson endorsed big banks. Top officials in President Barack Obama’s administration sided with the FSF in arguing against legislative curbs on the size of banks.

Geithner, Kaufman
On May 4, 2010, Geithner visited Kaufman in his Capitol Hill office. As president of the New York Fed in 2007 and 2008, Geithner helped design and run the central bank’s lending programs. The New York Fed supervised four of the six biggest U.S. banks and, during the credit crunch, put together a daily confidential report on Wall Street’s financial condition. Geithner was copied on these reports, based on a sampling of e- mails released by the Financial Crisis Inquiry Commission. At the meeting with Kaufman, Geithner argued that the issue of limiting bank size was too complex for Congress and that people who know the markets should handle these decisions, Kaufman says. According to Kaufman, Geithner said he preferred that bank supervisors from around the world, meeting in Basel, Switzerland, make rules increasing the amount of money banks need to hold in reserve. Passing laws in the U.S. would undercut his efforts in Basel, Geithner said, according to Kaufman. Anthony Coley, a spokesman for Geithner, declined to comment.

‘Punishing Success’
Lobbyists for the big banks made the winning case that forcing them to break up was “punishing success,” Brown says. Now that they can see how much the banks were borrowing from the Fed, senators might think differently, he says. The Fed supported curbing too-big-to-fail banks, including giving regulators the power to close large financial firms and implementing tougher supervision for big banks, says Fed General Counsel Scott G. Alvarez. The Fed didn’t take a position on whether large banks should be dismantled before they get into trouble. Dodd-Frank does provide a mechanism for regulators to break up the biggest banks. It established the Financial Stability Oversight Council that could order teetering banks to shut down in an orderly way. The council is headed by Geithner. “Dodd-Frank does not solve the problem of too big to fail,” says Shelby, the Alabama Republican. “Moral hazard and taxpayer exposure still very much exist.”

Below Market
Dean Baker, co-director of the Center for Economic and Policy Research in Washington, says banks “were either in bad shape or taking advantage of the Fed giving them a good deal. The former contradicts their public statements. The latter — getting loans at below-market rates during a financial crisis — is quite a gift.” The Fed says it typically makes emergency loans more expensive than those available in the marketplace to discourage banks from abusing the privilege. During the crisis, Fed loans were among the cheapest around, with funding available for as low as 0.01 percent in December 2008, according to data from the central bank and money-market rates tracked by Bloomberg. The Fed funds also benefited firms by allowing them to avoid selling assets to pay investors and depositors who pulled their money. So the assets stayed on the banks’ books, earning interest. Banks report the difference between what they earn on loans and investments and their borrowing expenses. The figure, known as net interest margin, provides a clue to how much profit the firms turned on their Fed loans, the costs of which were included in those expenses. To calculate how much banks stood to make, Bloomberg multiplied their tax-adjusted net interest margins by their average Fed debt during reporting periods in which they took emergency loans.

Added Income
The 190 firms for which data were available would have produced income of $13 billion, assuming all of the bailout funds were invested at the margins reported, the data show. The six biggest U.S. banks’ share of the estimated subsidy was $4.8 billion, or 23 percent of their combined net income during the time they were borrowing from the Fed. Citigroup would have taken in the most, with $1.8 billion. “The net interest margin is an effective way of getting at the benefits that these large banks received from the Fed,” says Gerald A. Hanweck, a former Fed economist who’s now a finance professor at George Mason University in Fairfax, Virginia. While the method isn’t perfect, it’s impossible to state the banks’ exact profits or savings from their Fed loans because the numbers aren’t disclosed and there isn’t enough publicly available data to figure it out. Opinsky, the JPMorgan spokesman, says he doesn’t think the calculation is fair because “in all likelihood, such funds were likely invested in very short-term investments,” which typically bring lower returns.

Standing Access
Even without tapping the Fed, the banks get a subsidy by having standing access to the central bank’s money, says Viral Acharya, a New York University economics professor who has worked as an academic adviser to the New York Fed. “Banks don’t give lines of credit to corporations for free,” he says. “Why should all these government guarantees and liquidity facilities be for free?” In the September 2008 meeting at which Paulson and Bernanke briefed lawmakers on the need for TARP, Bernanke said that if nothing was done, “unemployment would rise — to 8 or 9 percent from the prevailing 6.1 percent,” Paulson wrote in “On the Brink” (Business Plus, 2010).

Occupy Wall Street
The U.S. jobless rate hasn’t dipped below 8.8 percent since March 2009, 3.6 million homes have been foreclosed since August 2007, according to data provider RealtyTrac Inc., and police have clashed with Occupy Wall Street protesters, who say government policies favor the wealthiest citizens, in New York, Boston, Seattle and Oakland, California. The Tea Party, which supports a more limited role for government, has its roots in anger over the Wall Street bailouts, says Neil M. Barofsky, former TARP special inspector general and a Bloomberg Television contributing editor. “The lack of transparency is not just frustrating; it really blocked accountability,” Barofsky says. “When people don’t know the details, they fill in the blanks. They believe in conspiracies.”

In the end, Geithner had his way. The Brown-Kaufman proposal to limit the size of banks was defeated, 60 to 31. Bank supervisors meeting in Switzerland did mandate minimum reserves that institutions will have to hold, with higher levels for the world’s largest banks, including the six biggest in the U.S. Those rules can be changed by individual countries. They take full effect in 2019. Meanwhile, Kaufman says, “we’re absolutely, totally, 100 percent not prepared for another financial crisis.”

or HEY COOL MY TRACKING DEVICE has a DRUM MACHINE (and GPS!)
http://androidsecuritytest.com/features/logs-and-services/loggers/carrieriq/

NOW with KEYSTROKE LOGGING
http://www.informationweek.com/news/security/mobile/231903096
Smartphone Invader Tracks Your Every Move
Carrier IQ software, installed on more than 141 million mobile phones, tracks GPS location, websites visited, search queries, and all keys pressed.
by Mathew J. Schwartz  /  November 16, 2011

Software on many smartphones is tracking every move and website visited, without the knowledge of the phone’s user. And that information is being collected by a little known company, which could be sharing it with law enforcement agencies without requiring a subpoena and without keeping a record of the query.That’s among the conclusions that can be drawn from the discovery of a rootkit that’s running on a number of Verizon and Sprint phones, which tracks not just phone numbers dialed, but also the user’s GPS coordinates, websites visited, keys pressed, and many website searches, according to security researcher Trevor Eckhart. He discovered the rootkit after tracing suspicious network activity in a data center that he manages, and which he suspected related to a virus infection. But he traced the activity back to software made by Carrier IQ, which describes its “mobile service delivery” software as being a tool for measuring smartphone service quality and usage using software embedded in handsets. “The Carrier IQ solution gives you the unique ability to analyze in detail usage scenarios and fault conditions by type, location, application, and network performance while providing you with a detailed insight into the mobile experience as delivered at the handset rather than simply the state of the network components carrying it,” according to the website.

Carrier IQ software runs on 141 million handsets. In the United States, it ships installed by default on many handsets sold via Sprint and Verizon, and runs on a number of platforms, including Android, BlackBerry, and Nokia smartphones and tablets. Rather than carriers using Carrier IQ software to collect data and then store it themselves, it appears that Carrier IQ handles both the data collection and related analytics. According to the company’sprivacy and security policy, “information transmitted from enabled mobile devices is stored in a secure data center facility that meets or exceeds industry best practice guidelines for security policies and procedures.” The policy doesn’t detail those policies and procedures.

Eckhart said in an interview that the software is often configured by carriers to hide its presence from users. That means it functions per the Wikipedia definition of a rootkit: “Software that enables continued privileged access to a computer while actively hiding its presence from administrators by subverting standard operating system functionality or other applications.” The software, however, doesn’t have to be stealthy. Eckhart said that the default version of Carrier IQ “makes its presence known by putting a checkmark in the status bar,” and can generate surveys if calls get dropped or browsers crash unexpectedly, to help engineers identify the underlying problem. Still, after reviewing public-facing training videos he found online, Eckhart said he was alarmed to see just how much data was being gathered by Carrier IQ, and how easily it could be searched en masse–all of which makes him suspicious about how the data is being used. “If this was just legit use, say monitoring dropped calls, why would all on/off switches be stripped and made completely invisible? Users should always have an option to ‘opt-in’ to a program. There are obviously other uses,” he said. “It is a massive invasion of privacy.”

Carrier IQ makes the information it collects available to its customers via a portal. Eckhart said in a blog post that “from leaked training documents we can see that portal operators can view and [search] metrics by equipment ID, subscriber ID, and more.” As a result, anyone with access to the portal can “know ‘Joe Anyone’s’ location at any given time, what he is running on his device, keys being pressed, applications being used,” he said. Carrier IQ spokeswoman Mira Woods said, “Our customers select which metrics they need to gather based on their business need–such as network planning, customer care, device performance–within the bounds of the agreement they form with their end users. These business rules are translated into a profile, placed on the device which provides instructions on what metrics to actually gather.” She said that all collected data gets transmitted by Carrier IQ to carriers using a “secure encrypted channel,” at which point they typically use it for customer service or analyzing network performance. “The further processing or reuse of this data is subject to the agreement formed between our customer and their end user (of the mobile device) and the applicable laws of the country in which they are operating,” she said.

One concern for privacy advocates, however, is that carriers apparently share information of the type collected by this software freely with law enforcement agencies. Notably, research published by privacy expert Christopher Soghoian in 2009 found that Sprint had shared customers’ GPS location information with law enforcement agencies more than 8 million times over a 13-month period. Sprint had also developed tools to automatically fulfill the large volume of law enforcement agency requests, which seem to occur in a legal gray area that results in none of the requests or shared data queries being recorded. Eckhart said the information being collected by Carrier IQ was even more expansive than what Sprint had shared in 2009. “We can see from the dashboard that GPS data can be viewed historically or in real time by date, time, whatever. That makes for a very efficient law enforcement portal, just like what’s detailed being blatantly abused in Soghoian’s article. It also relates to how Verizon is gathering info for their new ad tracking program,” he said. “Things like exact keypress data being stored as well shows this. What use would what words I’m typing ever be to ‘network performance’? Maybe words per minute would be useful, but it’s not that–it’s an exact record of what you are typing.”

Verizon has publicly acknowledged that it uses Carrier IQ statistics, both for mobile usage information (device location, app and feature usage, and website addresses, which may include search string) as well as consumer information (use of Verizon products and services, as well as demographic information, such as gender, age, and dining preferences). It also offers customers a way to opt out of this usage. Meanwhile, “Sprint is known to collect Carrier IQ data because users have the application running reporting to them, but have no privacy policy, retention policy, or public information on what they use the data for,” said Eckhart. But Sprint spokesman Jason Gertzen said via email that Sprint uses the information for diagnostic purposes. “Carrier IQ provides information that allows us to analyze our network performance and identify where we should be improving service. We also use the data to understand device performance so we can figure out when issues are occurring,” he said. “The information collected is not sold and we don’t provide a direct feed of this data to anyone outside of Sprint.” Deactivating installed Carrier IQ software can be difficult, at least as implemented by many carriers. While Samsung Android devices offer a somewhat hidden Carrier IQ on/off switch, HTC Android devices offer no such feature. Accordingly, if you buy an ex-Sprint phone off of eBay and Carrier IQ software is installed, you’re being tracked, said Eckhart. But Carrier IQ’s Woods said that her company’s software is set to disable data collection if the device’s SIM card or mobile carrier changes.

How can you determine if the software is running on a device? “Logging TestApp scanner will detect it in the kernel–use ‘Check Props’ feature–as well as files used in the regular Loggers scan,” said Eckhart. He’s the developer behind Logging TestApp, which can also be used to reveal the Carrier IQ menus often hidden by carriers when they roll out the application. If Carrier IQ is found and isn’t wanted, deleting it can also be difficult. “The only way to remove Carrier IQ is with advanced skills. If you choose to void your warranty and unlock your bootloader you can (mostly) remove Carrier IQ,” he said. “Logging TestApp can identify files used in logging and you can manually patch or use [the] Pro version to automatically remove [them].”

Android expert Tim Schofield has also released a YouTube video showing how to remove Carrier IQ from the Samsung Epic 4G running Android Gingerbread 2.3.5, but warned that it would require flashing the ROM. “What [Carrier IQ] does is log things you do and send it to Sprint, so it’s like a spyware thing that you don’t want on your phone,” he said.

Samsung screenshots thanks to k0nane on XDA See the full post where he removed carrier IQ here

CARRIER IQ

http://www.theinquirer.net/inquirer/news/2125853/carrier-iq-defends-android-rootkits-accusation
Carrier IQ defends against Android rootkits accusation
Handset makers and carriers to blame
by Lawrence Latif / Nov 17 2011

MOBILE ANALYTICS OUTFIT Carrier IQ is facing a growing firestorm over its secretive analytics software that is deeply embedded into mobile operating systems such as Google’s Android. Carrier IQ, which claims to provide ‘mobile intelligence’, has been accused of supplying rootkits that track user interactions on smartphones. Carrier IQ’s software is found on many operating systems including Google’s Android and records application runtimes, media playback, location satistics and when calls are received.

An investigation conducted by the smart chaps at XDA-Developers brought Carrier IQ’s activities to light, with the investigators labeling the software as a rootkit. It also found that stopping the service was not a trivial matter, since it’s hidden under several layers of abstraction.
Carrier IQ became aware of the growing backlash against its software and issued a release in which it claimed device manufacturers use its software to “improve the quality of the network, understand device issues and ultimately improve the user experience”. It went on to categorically deny that it was tracking keystrokes or providing tracking tools.
As for the data collected by Carrier IQ’s software, the firm went on to say, “Our customers have stringent policies and obligations on data collection and retention. Each customer is different and our technology is customized to their exacting needs and legal requirements.”

Being fair to Carrier IQ, it is not secretly splicing in tracker-ware into its products like Sony did, rather carriers and handset makers are opting to include the software without informing users. The handset makers should be questioned as to their motives for including such software and asked to provide detailed documents listing what they collect, what they do with the information and how long the information is stored. Whatever the reason for including Carrier IQ’s software, the facts are that users were unaware of it and it is engineered to be extremely difficult to remove. Those facts alone are enough to warrant serious concern.


Carrier IQ markets its software as a "mobile service intelligence solution" on its Web site. "We give wireless carriers and handset manufacturers unprecedented insight into their customers' mobile experience."

Carrier IQ markets its software as a “mobile service intelligence solution” on its Web site. “We give wireless carriers and handset manufacturers unprecedented insight into their customers’ mobile experience.” (Credit: Carrier IQ)

CONTACT
http://www.carrieriq.com/contact/index.htm

YOU SAY ‘ROOTKIT,’ I SAY ‘DIAGNOSTIC TOOL’
http://news.cnet.com/8301-27080_3-57326974-245/you-say-rootkit-i-say-diagnostic-tool/
by Elinor Mills /  November 17, 2011

Android developer Trevor Eckhart recently noticed something odd on several EVO HTC devices: hidden software that phoned home to the carrier with details about how the phone was being used and where it was. The software, Carrier IQ, tracked the location of the phone, what keys were pressed, which Web pages were visited, when calls were placed, and other information on how the device is used and when.

Eckhart discovered that Carrier IQ can be shown as present on the phone to users or configured as hidden, which was the case on the HTC phones he analyzed. And he found what he described as “leaked training documents” that indicate that carriers can view customer usage information via a remote portal that displays devices by equipment ID and subscriber ID. “The only way to remove Carrier IQ is with advanced skills,” Eckhart wrote in a report,published on the Web on Monday. “If you choose to void your warranty and unlock your bootloader you can (mostly) remove Carrier IQ.” Sprint, meanwhile, “has no privacy policy, retention policy, or public information on what they use the data for,” Eckhart wrote.

HTC Android devices have no on-off switch for Carrier IQ, while Samsung devices do, but it is not easily accessible or pointed out to users, he said. Because customers do not give explicit permission for this data collection and don’t even know this software is on their phones, and they can’t opt out of it, Eckhart says it is a clear privacy violation. He likens Carrier IQ to malware. “Carrier IQ is rootkit software,” he wrote in his report. “It listens on the phones for commands contained in ‘tasking profiles’ sent a number of ways and returns whatever ‘metric’ was asked for.”

According to Wikipedia, a rootkit is software “that enables continued privileged access to a computer while actively hiding its presence from administrators by subverting standard operating system functionality or other applications.” Typically, hackers install a rootkit onto a target system by exploiting a software vulnerability or using a stolen password. They are characterized by stealth and malicious purpose. Definitions aside, the types of data gathered is enough to set off alarms for privacy minded folk. “If it’s just for ‘network performance’ why wouldn’t they give users a choice?” Eckhart said in an e-mail to CNET late last night. “Any program logging this extent of personal information should always be opt-in.”

A Sprint spokesman provided a general statement about the use of Carrier IQ, but did not provide comment to follow-up questions about whether customers know about the data collection and why they can’t opt out. Here is the Sprint statement:

“Carrier IQ provides information that allows Sprint, and other carriers that use it, to analyze our network performance and identify where we should be improving service. We also use the data to understand device performance so we can figure out when issues are occurring. We collect enough information to understand the customer experience with devices on our network and how to address any connection problems, but we do not and cannot look at the contents of messages, photos, videos, etc., using this tool. The information collected is not sold and we don’t provide a direct feed of this data to anyone outside of Sprint.

Sprint maintains a serious commitment to respecting and protecting the privacy and security of each customer’s personally identifiable information and other customer data. A key element of this involves communicating with our customers about our information privacy practices. The Sprint privacy policy makes it clear we collect information that includes how a device is functioning and how it is being used. Carrier IQ is an integral part of the Sprint service.”

Carrier IQ representatives said the data carriers collect with their software has a legitimate purpose and is handled responsibly. “We are collecting information that would be regarded by most people as sensitive,” Andrew Coward, vice president of marketing for Carrier IQ, told CNET today. “So we work within the network of the operator or in the facilities [they approve] and which are up to their standards as far as data retention” and encryption.

Mountain View, Calif.-based Carrier IQ launched six years ago expressly to offer software that serves as an “embedded performance management tool,” he said. “This has caught us off guard in that the technology has been around a long time,” he added. “We’re in the business of counting things that happen on the phone to help carriers improve service.” For example, knowing exactly where a phone call was dropped can help a carrier identify network troubles in a geographic location. “We do want to know when you’ve had a dropped call, if an SMS didn’t work and if you’ve got battery life problems,” Coward said.

Information on keys that are pressed and how many times the phone is charged can provide activity information over the life of a phone, which is important for device manufacturers, he said. “We are not interested and do not gather the text or the text message and do not have the capacity to do that,” he said. Processing specific data like that from millions of devices would be impractical to do, he said. In addition, the data logged is not real-time in Carrier IQ, which diminishes its usefulness, and carriers have other ways of getting sensitive user data if they want, according to Coward. “You can’t make a phone call on the mobile network without them knowing where you are,” he said. “Our customers believe that they have obtained permission from their customers to gather this performance data.”

But Eckhart questioned the legality of carriers collecting keypresses and some of the other information. “As far as Sprint, the data they are logging is very personal,” he said in his e-mail. “How do we know who is getting this? Every customer service personnel? Law enforcement? Is my location and browsing history stored forever?”

It’s unclear what devices have Carrier IQ software installed. Coward said Carrier IQ is used by more than a dozen device manufacturers, including smartphones and tablets, but he declined to name the companies or devices. Eckhart names HTC, Samsung, Nokia, BlackBerry, Sprint, and Verizon in his report on Carrier IQ. HTC did not respond to requests for comment and a Samsung representative said she would try to get comment. But a Verizon representative said the company does not use Carrier IQ on its devices and Coward confirmed that. (Eckhart’s report linked to this Verizon Web page that talks about collecting data on phone location, Web sites visited and other information.) Eckhart did not immediately respond to e-mails and phone calls seeking a follow-up interview today. In the paranoid world of security researchers, the notion of privacy is nine-tenths perception and potential. Carriers should make it clear what data they are collecting and what benefit doing so provides to the customers. And, if possible, it should be opt in.

COMPLETE LIST of ALL PHONES with CARRIER IQ SPYWARE INSTALLED
http://gizmodo.com/5868732/the-complete-list-of-all-the-phones-with-carrier-iq-spyware-installed

Responding to the US Senate request lead by Senator Al Franken, AT&T, Sprint, HTC, and Samsung have sent the list of all the phones with Carrier IQ spyware installed in them.

The carriers have also admitted that Carrier IQ also captured the content of text messages “under certain conditions.”

Here’s the complete list:

AT&T
AT&T claims about 900,000 users using phones with Carrier IQ. The software is active on eleven AT&T wireless consumer devices:

• Motorola Atrix 2
• Motorola Bravo
• Pantech Pursuit II
• Pantech Breeze 3
• Pantech P5000 (Link 2)
• Pantech Pocket
• Sierra Wireless Shockwave
• LG Thrill
• ZTE Avail
• ZTE Z331
• SEMC Xperia Play

It’s also installed but not active “due to the potential for the software agent to interfere with the performance” of the following phones:

• HTC Vivid
• LG Nitro
• Samsung Skyrocket

Carrier IQ is also packaged in the free AT&T Mark the Spot application, available for Android and RIM.

Sprint
26 million active Sprint devices have the Carrier IQ software installed, says Sprint. That’s almost half of all their subscribers, 53.4 million customers, so you can assume that they have it installed in all the Android phones of the manufacturers Sprint reported to the US senate:

• Audiovox
• Franklin
• HTC
• Huawei
• Kyocera
• LG
• Motorola
• Novatel
• Palmone
• Samsung
• Sanyo
• Sierra Wireless

Samsung
Samsung claims 25 million phones affected. It has directly installed Carrier IQ at the factory in the following models:

Sprint
• SPH-M800 (Samsung Instinct)
• SPH-M540 (Samsung Rant)
• SPH-M630 (Samsung Highnote)
• SPH-M810 (Samsung Instinct s30)
• SPH-M550 (Samsung Exclaim)
• SPH-M560 (Samsung Reclaim)
• SPH-M850 (Samsung Instinct HD)
• SPH-I350 (Samsung Intrepid)
• SPH-M900 (Samsung Moment)
• SPH-M350 (Samsung Seek)
• SPH-M570 (Samsung Restore)
• SPH-D700 (Samsung Epic 4G)
• SPH-M910 (Samsung Intercept)
• SPH-M920 (Samsung Transform)
• SPH-M260 (Samsung Factor)
• SPH-M380 (Samsung Trender)
• SPH-M820 (Samsung Galaxy Prevail)
• SPH-M580 (Samsung Replenish)
• SPH-D600 (Samsung Conquer 4G)
• SPH-M930 (Samsung Transform Ultra)
• SPH-D710 (Samsung Epic 4G Touch)
• SPH-M220
• SPH-M240
• SPH-M320
• SPH-M330
• SPH-M360
• SPH-P100
• SPH-Z400

T-Mobile
•T989 (Samsung Hercules)
•T679 (Samsung Galaxy W)

Cricket
• SCH-R500 (Samsung Hue)
• SCH-R631 (Samsung Messager Touch)
• SCH-R261 (Samsung Chrono)
• SCH-R380 (Samsung Freeform III)

AT&T
• SGH-i727 (Samsung Galaxy S II Skyrocket)

HTC
HTC preinstalled Carrier IQ spyware on about 6.3 million Android phones:

Sprint
• Snap
• Touch Pro 2
• Hero
• EVO 4G
• EVO Shift 4G
• EVO Design

T-Mobile
• Amaze 4G

AT&T
• Vivid

What is Carrier IQ?
Carrier IQ logs information about your whereabouts as well as other personal data such as browsing history, application usage and phone numbers.

The Carrier IQ application also captures the content of your text messages, according to AT&T. This happens when you are talking on the phone and you sned or receive a text message: “the CIQ software also captured the content of SMS text messages—when and only when—such messages were sent or received while a voice call was in progress.” [US Senator Al Franken’s responseAT&T Response (PDF)Sprint Response (PDF)Samsung Response (PDF)HTC Response (PDF)CarrierIQ response (PDF), via Verge and Business Week]

http://www.wilsoncenter.org/events/docs/A%20National%20Strategic%20Narrative.pdf
by Mr. Y

http://www.foreignpolicy.com/articles/2011/04/13/the_y_article

On Friday, April 8, as members of the U.S. Congress engaged in a last-minute game of chicken over the federal budget, the Pentagon quietly issued a report that received little initial attention: “A National Strategic Narrative.” The report was issued under the pseudonym of “Mr. Y,” a takeoff on George Kennan’s 1946 “Long Telegram” from Moscow (published under the name “X” the following year in Foreign Affairs) that helped set containment as the cornerstone of U.S. strategy for dealing with the Soviet Union. The piece was written by two senior members of the Joint Chiefs of Staff in a “personal” capacity, but it is clear that it would not have seen the light of day without a measure of official approval. Its findings are revelatory, and they deserve to be read and appreciated not only by every lawmaker in Congress, but by every American citizen.

The narrative argues that the United States is fundamentally getting it wrong when it comes to setting its priorities, particularly with regard to the budget and how Americans as a nation use their resources more broadly. The report says Americans are overreacting to Islamic extremism, underinvesting in their youth, and failing to embrace the sense of competition and opportunity that made America a world power. The United States has been increasingly consumed by seeing the world through the lens of threat, while failing to understand that influence, competitiveness, and innovation are the key to advancing American interests in the modern world.

Courageously, the authors make the case that America continues to rely far too heavily on its military as the primary tool for how it engages the world. Instead of simply pumping more and more dollars into defense, the narrative argues:

By investing energy, talent, and dollars now in the education and training of young Americans — the scientists, statesmen, industrialists, farmers, inventors, educators, clergy, artists, service members, and parents, of tomorrow — we are truly investing in our ability to successfully compete in, and influence, the strategic environment of the future. Our first investment priority, then, is intellectual capital and a sustainable infrastructure of education, health and social services to provide for the continuing development and growth of America’s youth.

Yet, it is investments in America’s long-term human resources that have come under the fiercest attack in the current budget environment. As the United States tries to compete with China, India, and the European Union, does it make sense to have almost doubled the Pentagon budget in the last decade while slashing education budgets across the country?

TEACHING SOFT POWER
http://hegemonicobsessions.com/?p=386
by HANS-INGE LANGØ / April 15th, 2011

Foreign Policy‘s John Norris has picked up on an article written by two U.S. military officers that seems to have gone largely unnoticed by the press. The article, titled “A National Strategic Narrative,” is being compared to George F. Kennan’s famous article “The Sources of Soviet Conduct” for laying out a new direction in U.S. foreign policy (Kennan used the pseudonym “X” for the article which was published inForeign Affairs in July 1947). The authors, U.S. Navy Captain Wayne Porter and U.S. Marine Corps Colonel Mark Mykleby, invite this comparison by signing it “Mr. Y” and making several references to Kennan’s important note. Whereas Kennan laid the intellectual foundation for a strategy of containtment vis-à-vis the Soviet Union, Porter and Mykleby are calling for a strategy of sustainment: “It is time for America to re-focus our national interests and principles through a long lens on the global environment of tomorrow. It is time to move beyond a strategy of containment to a strategy of sustainment (sustainability); from an emphasis on power and control to an emphasis on strength and influence; from a defensive posture of exclusion, to a proactive posture of engagement. We must recognize that security means more than defense, and sustaining security requires adaptation and evolution, the leverage of converging interests and interdependencies.”

The authors lay out three priorities as part of this new national strategy: investing in education to build the economy; relying less on military force and utilizing other parts of the foreign policy tool box, such as development and aid, to ensure long-term security; and developing sustainable access to, cultivation and use of natural resources. These are not ideas one would normally associate with the military, but something seems to be changing at the Pentagon. Secretary of Defense Robert Gates has warned that the civilian side of U.S. foreign policy (e.g. the State Department and USAID) is underfunded. In a 2007 speech, he called cuts to ‘soft power’ tools during the 1990s “short-sighted,” saying it was a “gutting of America’s ability to engage, assist, and communicate with other parts of the world.” The message has not changed since then. In fact, both Gates and Admiral Michael Mullen, the Chairman of the Joint Chiefs of Staff, have vigorously opposed cuts to the State Department budget on repeated occasions. The Y article seems to be a continuation of this emphasis of ‘soft power’, and John Norris rightfully concludes that though the article was written in a personal capacity, “it would not have seen the light of day without a measure of official approval.”

It is a fundamentally optimistic proposition, confident in the capability of the United States to achieve positive influence in the world and the willingness of others to cooperate, rather than compete. Both these assertions are debatable. Should the United States move away from interventionism, it could find it has more influence through soft power than blunt coercion, yet there is no guarantee for that. As others countries rise, like the United States once did, they too will seek their place in the world, testing the boundaries of cooperation and accommodation. In the next couple of decades, Asia will be ripe for conflicts as China and India assert themselves, with Japan, South Korea and a host of other countries seeking physical and economic security. That is not to say that Asia is doomed to repeat the mistakes of Europe. One could make the case that economic and cultural developments, with their accompanying interdependencies, lessen the incentives for war. While China is asserting itself through territorial claims in the South China Sea and elaborate navy exercises, Beijing is primarily concerned with keeping the economy running at a brisk pace. War is bad for business, and China’s military remains inferior to that of the United States – let alone a coalition of U.S. and other regional forces. In addition, nuclear proliferation serves as a deterrent of total war that was woefully lacking in Europe during the 19th century and the first half of the 20th century. Yet despite these disincentives, all the major players in Asia are building up their military capabilities, and some are even making significant changes to their national security strategies in anticipation of a more threatening China. This development is taking place largely independently of U.S. actions in the region and despite security guarantees given to South Korea and Japan. The United States is even encouraging Japan to take a larger share of its own security burden, which basically means more defense spending and a more offensive posture. Perhaps this is due to fiscal concerns, as the United States can ill afford to subsidize its allies’ security forever, but it might also come from a realization that there are limits to U.S. influence in the region. The Asian powers have their own national interests irrespective of U.S. concerns. This means that even if the United States adopts a more cooperative approach to foreign policy, others might not follow.

Direct confrontation is not the only challenge facing the United States. One could even make the case that war is not even at the top of the list. Competition for natural resources and access to markets is likelier to result in lawfare, economic sanctions and other soft power confrontations than kinetic actions. To solve these issues, the United States needs a large toolbox, so Porter and Mykleby are right in this respect to focus on ‘smart power’. The danger is that a normative approach to foreign policy might crash into a real world of realpolitik and hard power. Speaking softly will only get you so far, unless you carry a big stick. Looking beyond the emphasis on ‘soft power’, there is a more fundamental message coming out of the Y article. Though a cliché it may be, one is reminded of John Winthrop and his famous sermon “City Upon A Hill” from 1630 when reading the article. The authors urge policymakers, and Americans in general, to examine the role of the United States in an increasingly interdependent world: “This Narrative advocates for America to pursue her enduring interests of prosperity and security through a strategy of sustainability that is built upon the solid foundation of our national values. As Americans we needn’t seek the world’s friendship or to proselytize the virtues of our society. Neither do we seek to bully, intimidate, cajole, or persuade others to accept our unique values or to share our national objectives. Rather, we will let others draw their own conclusions based upon our actions.”

As Jonathan Monten describes it in his excellent article “The Roots of the Bush Doctrine,” American exceptionalism in foreign policy has historically taken on two distinct characters: exemplarism and vindicationism. We last saw the former during the presidency of George W. Bush, when foreign policy thinking was dominated by the belief that the United States had to take active measure to promote American values of liberty abroad. Merely being an example was not enough to cause change. The latter, which is on display in the Y article, is the idea that the United States should sort out its own house first and act as a beacon of light to the world, instead of forcing its ideals on others. The practical implication of this would likely be a policy of offshore balancing, and here is the real potential of Porter and Mykleby’s proposition. This would not be isolationism – as noninterventionism is often, and mistakenly, called. It would be a policy based on the genuine belief that the United States cannot, and should not, run the world. There are limits to U.S. power, and nationbuilding schemes like the ones Iraq and Afghanistan come with huge opportunity costs both abroad and at home.

CHINA POLITELY COMMENTS
http://news.xinhuanet.com/english2010/china/2011-04/10/c_13822179.htm
http://news.xinhuanet.com/english2010/china/2011-04/10/c_13822287.htm
Facts and Figures: U.S. Human Rights Situation

BEIJING, April 10 (Xinhua) — China’s Information Office of the State Council, or cabinet, published a report titled “The Human Rights Record of the United States in 2010” here Sunday. Following is the full text:

Human Rights Record of the United States in 2010

The State Department of the United States released its Country Reports on Human Rights Practices for 2010 on April 8, 2011. As in previous years, the reports are full of distortions and accusations of the human rights situation in more than 190 countries and regions including China. However, the United States turned a blind eye to its own terrible human rights situation and seldom mentioned it. The Human Rights Record of the United States in 2010 is prepared to urge the United States to face up to its own human rights issues.

I. On Life, Property and Personal Security

The United States reports the world’s highest incidence of violent crimes, and its people’s lives, properties and personal security are not duly protected.

Every year, one out of every five people is a victim of a crime in the United States. No other nation on earth has a rate that is higher. In 2009, an estimated 4.3 million violent crimes, 15.6 million property crimes and 133,000 personal thefts were committed against U.S. residents aged 12 or older, and the violent crime rate was 17.1 victimizations per 1,000 persons, according to a report published by the U.S. Department of Justice on October 13, 2010 (Criminal Victimization 2009, U.S. Department of Justice, http://www.ojp.usdoj.gov). The crime rate surged in many cities in the United States. St. Louis in Missouri reported more than 2,070 violent crimes per 100,000 residents, making it the nation’s most dangerous city (The Associated Press, November 22, 2010). Detroit residents experienced more than 15,000 violent crimes each year, which means the city has 1,600 violent crimes per 100,000 residents. The United States’ four big cities – Philadelphia, Chicago, Los Angeles and New York – reported increases in murders in 2010 from the previous year (USA Today, December 5, 2010). Twenty-five murder cases occurred in Los Angeles County in a week from March 29 to April 4, 2010; and in the first half of 2010, 373 people were killed in murders in Los Angeles County (www.lapdonline.org). As of November 11, New York City saw 464 homicide cases, up 16 percent from the 400 reported at the same time last year (The Washington Post, November 12, 2010).

The United States exercised lax control on the already rampant gun ownership. Reuters reported on November 10, 2010 that the United States ranks first in the world in terms of the number of privately-owned guns. Some 90 million people own an estimated 200 million guns in the United States, which has a population of about 300 million. The Supreme Court of the United States ruled on June 28, 2010 that the second amendment of the U.S. Constitution gives Americans the right to bear arms that can not be violated by state and local governments, thus extending the Americans’ rights to own a gun for self-defense purposes to the entire country (The Washington Post, June 29, 2010). Four U.S. states – Tennessee, Arizona, Georgia and Virginia – allow loaded guns in bars. And 18 other states allow weapons in restaurants that serve alcohol (The New York Times, October 3, 2010). Tennessee has nearly 300,000 handgun permit holders. The Washington Times reported on June 7, 2010 that in November 2008, a total of 450,000 more people in the United States purchased firearms than had bought them in November 2007. This was a more than 10-fold increase, compared with the change in sales from November 2007 over November 2006. From November 2008 to October 2009, almost 2.5 million more people bought guns than had done so in the preceding 12 months (The Washington Times, June 7, 2010). The frequent campus shootings in colleges in the United States came to the spotlight in recent years. The United Kingdom’s Daily Telegraph reported on February 21, 2011 that a new law that looks certain to pass through the legislature in Texas, the United States, would allow half a million students and teachers in its 38 public colleges to carry guns on campus. It would become only the second state, after Utah, to enforce such a rule.

The United States had high incidence of gun-related blood-shed crimes. Statistics showed there were 12,000 gun murders a year in the United States (The New York Times, September 26, 2010). Figures released by the U.S. Department of Justice on October 13, 2010 showed weapons were used in 22 percent of all violent crimes in the United States in 2009, and about 47 percent of robberies were committed with arms (www.ojp.usdoj.gov, October 13, 2010). On March 30, 2010, five men killed four people and seriously injured five others in a deadly drive-by shooting (The Washington Post, April 27, 2010). In April, six separate shootings occurred overnight, leaving 16 total people shot, two fatally (www.myfoxchicago.com). On April 3, a deadly shooting at a restaurant in North Hollywood, Los Angeles, left four people dead and two others wounded (www.nbclosangeles.com, April 4, 2010). One person was killed and 21 others wounded in separate shootings around Chicago roughly between May 29 and 30 (www.chicagobreakingnews.com, May 30, 2010). In June, 52 people were shot at a weekend in Chicago (www.huffingtonpost.com, June 21, 2010). Three police officers were shot dead by assailants in the three months from May to July (Chicago Tribune, July 19, 2010). A total of 303 people were shot and 33 of them were killed in Chicago in the 31 days of July in 2010. Between November 5 and 8, four people were killed and at least five others injured in separate shootings in Oakland (World Journal, November 11, 2010). On November 30, a 15-year-old boy in Marinette County, Wisconsin, took his teacher and 24 classmates hostage at gunpoint (abcNews, November 30, 2010). On January 8, 2011, a deadly rampage critically wounded U.S. Rep. Gabrielle Giffords. Six people were killed and 12 others injured in the attack (Los Angeles Times, January 9, 2011).

II. On Civil and Political Rights

In the United States, the violation of citizens’ civil and political rights by the government is severe.

Citizen’ s privacy has been undermined. According to figures released by the American Civil Liberties Union (ACLU) in September 2010, more than 6,600 travelers had been subject to electronic device searches between October 1, 2008 and June 2, 2010, nearly half of them American citizens. A report on The Wall Street Journal on September 7, 2010, said the Department of Homeland Security (DHS) was sued over its policies that allegedly authorize the search and seizure of laptops, cellphones and other electronic devices without a reasonable suspicion of wrongdoing. The policies were claimed to leave no limit on how long the DHS can keep a traveler’ s devices or on the scope of private information that can be searched, copied or detained. There is no provision for judicial approval or supervision. When Colombian journalist Hollman Morris sought a U.S. student visa so he could take a fellowship for journalists at Harvard University, his application was denied on July 17, 2010, as he was ineligible under the “terrorist activities” section of the U.S.A. Patriot Act. An Arab American named Yasir Afifi, living in California, found the FBI attached an electronic GPS tracking device near the right rear wheel of his car. In August, ACLU, joined by the Asian Law Caucus and the San Francisco Bay Guardian weekly, had filed a lawsuit to expedite the release of FBI records on the investigation and surveillance of Muslim communities in the Bay Area. The San Francisco FBI office has declined to comment on the matter “because it’ s still an ongoing investigation.” (The Washington Post, October 13, 2010). In October 2010, the Transportation Security Administration raised the security level at U.S. airports requiring passengers to go through a full-body scanner machine or pat-downs. It also claimed that passengers can not refuse the security check based on their religious beliefs. Civil rights groups contended the more intensive screening violates civil liberties including freedom of religion, the right to privacy and the constitutional protection against unreasonable searches (AP, November 16, 2010). The ACLU and the U.S. Travel Association have been getting thousands of complaints about airport security measures (The Christian Science Monitor, November 20, 2010).

Abuse of violence and torturing suspects to get confession is serious in the U. S. law enforcement. According to a report of Associated Press on October 14, 2010, the New York Police Department (NYPD) paid about 964 million U.S. dollars to resolve claims against its officers over the past decade. Among them was a case that an unarmed man was killed in a 50-bullet police shooting on his wedding day. The three police officers were acquitted of manslaughter and the NYDP simply settled the case with money (China Press, October 15, 2010). In a country that boasts “judicial justice,” what justice did the above-mentioned victims get? In June 2010, a federal jury found former Chicago police lieutenant Jon Burge guilty of perjury and obstruction of justice. Burge and officers under his command shocked, suffocated and burned suspects into giving confessions in the 1970s and 1980s (The Boston Globe, November 5, 2010). According to a report on Chicago Tribune on May 12, 2010, Chicago Police was charged with arresting people without warrants, shackling them to the wall or metal benches, feeding them infrequently and holding them without bathroom breaks and giving them no bedding, which were deemed consistent with tactics of “soft torture” used to extract involuntary confessions. On March 22, a distraught homeless man was shot dead in Potland, Oregon, by four shots from a police officer (China Press, April 1, 2010). An off-duty Westminster police officer was arrested on suspicion of kidnapping and raping a woman on April 3 while a corrections officer was accused of being an accessory (Los Angeles Times, April 6, 2010). On April 17 in Seattle, Washington, a gang detective and patrol officer kicked a suspect and verbally assaulted him (Seattle Post-Intelligencer, May 10, 2010). On March 24, Chad Holley, 15, was brutally beaten by eight police officers in Houston. The teen claimed he was face down on the ground while officers punched him in the face and kneed him in the back. After a two-month-long investigation, four officers were indicted and fired (Houston Chronicle, May 4, June 23, 2010). On August 11, three people were injured by police shooting when police officers chased a stolen van in Prince George’ s County. Family members of the three injured argued why the police fired into the van when nobody on the van fired at them (The Washington Post, August 14, 2010). On September 5, 2010, a Los Angeles police officer killed a Guatemalan immigrant by two shots and triggered a large scale protest. Police clashed with protesters and arrested 22 of them (The New York Times, September 8, 2010). On November 5, 2010, a large demonstration took place in Oakland against a Los Angeles court verdict which put Johannes Mehserle, a police officer, to two years in prison as he shot and killed unarmed African American Oscar Grant two years ago. Police arrested more than 150 people in the protest (San Francisco Chronicle, November 9, 2010).

The United States has always called itself “land of freedom,” but the number of inmates in the country is the world’ s largest. According to a report released by the Pew Center on the States’ Public Safety Performance Project in 2008, one in every 100 adults in the U.S. are in jail and the figure was one in every 400 in 1970. By 2011, America will have more than 1.7 million men and women in prison, an increase of 13 percent over that of 2006. The sharp increase will lead to overcrowding prisons. California prisons now hold 164,000 inmates, double their intended capacity (The Wall Street Journal, December 1, 2010). In a New Beginnings facility for the worst juvenile offenders in Washington DC, only 60 beds are for 550 youths who in 2009 were charged with the most violent crimes. Many of them would violate the laws again without proper care or be subject to violent crimes (The Washington Post, August 28, 2010). Due to poor management and conditions, unrest frequently occurred in prisons. According to a report on Chicago Tribune on July 18, 2010, more than 20 former Cook County inmates filed suit saying they were handcuffed or shackled during labor while in the custody, leaving serious physical and psychological damage. On October 19, 2010, at least 129 inmates took part in a riot at Calipatria State Prison, leaving two dead and a dozen injured (China Press, October 20, 2010). In November, AP released a video showing an inmate, being beaten by a fellow inmate in an Idaho prison, managed to plead for help through a prison guard station window but officers looked on and no one intervened until he was knocked unconscious. The prison was dubbed “gladiator school” (China Press, December 2, 2010).

Wrongful conviction occurred quite often in the United States. In the past two decades, a total of 266 people were exonerated through DNA tests, among them 17 were on death row (Chicago Tribune, July 11, 2010). A report from The Washington Post on April 23, 2010, said Washington DC Police admitted 41 charges they raised against a 14-year-old boy, including four first-degree murders, were false and the teen never confessed to any charge. Police of Will County, Illinois, had tortured Kevin Fox to confess the killing of his three-year-old daughter and he had served eight months in prison before a DNA test exonerated him. Similar case happened in Zion, Illinois, that Jerry Hobbs were forced by the police to confess the killing of his eight-year-old daughter and had been in prison for five years before DNA tests proved his innocence. Barry Gibbs had served 19 years in prison when his conviction of killing a prostitute in 1986 was overturned in 2005 and received 9.9 million U.S. dollars from New York City government in June 2010 (The New York Times, June 4, 2010).

The U.S. regards itself as “the beacon of democracy.” However, its democracy is largely based on money. According to a report from The Washington Post on October 26, 2010, U.S. House and Senate candidates shattered fundraising records for a midterm election, taking in more than 1.5 billion U.S. dollars as of October 24. The midterm election, held in November 2010, finally cost 3.98 billion U.S. dollars, the most expensive in the U.S. history. Interest groups have actively spent on the election. As of October 6, 2010, the 80 million U.S. dollars spent by groups outside the Democratic and Republican parties dwarfed the 16 million U.S. dollars for the 2006 midterms. One of the biggest spenders nationwide was the American Future Fund from Iowa, which spent 7 million U.S. dollars on behalf of Republicans in more than two dozen House and Senate races. One major player the 60 Plus Association spent 7 million dollars on election related ads. The American Federation of States, County and Municipal Employees spent 103.9 million U.S. dollars on the campaigns from October 22 to 27 (The New York Times, November 1, 2010). U.S. citizens have expressed discontent at the huge cost in the elections. A New York Times/CBS poll showed nearly 8 in 10 U.S. citizens said it was important to limit the campaign expense (The New York Times, October 22, 2010).

While advocating Internet freedom, the U.S. in fact imposes fairly strict restriction on cyberspace. On June 24, 2010, the U.S. Senate Committee on Homeland Security and Governmental Affairs approved the Protecting Cyberspace as a National Asset Act, which will give the federal government “absolute power” to shut down the Internet under a declared national emergency. Handing government the power to control the Internet will only be the first step towards a greatly restricted Internet system, whereby individual IDs and government permission would be required to operate a website. The United States applies double standards on Internet freedom by requesting unrestricted “Internet freedom” in other countries, which becomes an important diplomatic tool for the United States to impose pressure and seek hegemony, and imposing strict restriction within its territory. An article on BBC on February 16, 2011 noted the U.S. government wants to boost Internet freedom to give voices to citizens living in societies regarded as “closed” and questions those governments’ control over information flow, although within its borders the U.S. government tries to create a legal frame to fight the challenge posed by Wikileaks. The U.S. government might be sensitive to the impact of the free flow of electronic information on its territory for which it advocates, but it wants to practice diplomacy by other means, including the Internet, particularly the social networks.

An article on the U.S.-based Foreign Policy Magazine admitted that the U.S government’s approach to the Internet remains “full of problems and contradictions” (Foreign Policy Magazine website, February 17, 2011).

III. On Economic, Social and Cultural Rights

The United States is the world’s richest country, but Americans’ economic, social and cultural rights protection is going from bad to worse.

Unemployment rate in the United States has been stubbornly high. From December 2007 to October 2010, a total of 7.5 million jobs were lost in the country (The New York Times, November 19, 2010). According to statistics released by the U.S. Department of Labor on December 3, 2010, the U.S. unemployment rate edged up to 9.8 percent in November 2010, and the number of unemployed persons was 15 million in November, among whom, 41.9 percent were jobless for 27 weeks and more (Data.bls.gov). The jobless rate of California in January 2010 was 12.5 percent, its worst on record. Unemployment topped 20 percent in eight California counties (The Los Angeles Times, March 11, 2010). Unemployment rate of New York State was 8.3 percent in October 2010. There were nearly 800,000 people unemployed statewide, and about 527,000 people were collecting unemployment benefits from the state (The New York Times, November 19, 2010). Employment situation for the disabled was worse. According to statistics released by the U.S. Department of Labor on August 25, 2010, the average unemployment rate for disabled workers was 14.5 percent in 2009, and nearly a third of workers with disabilities worked only part-time. The jobless rate for workers with disabilities who had at least a bachelor’s degree was 8.3 percent, which was higher than the 4.5 percent rate for college-educated workers without disabilities (The Wall Street Journal, August 26, 2010). The unemployment rate for those with disabilities had risen to 16.4 percent as of July 2010 (The Wall Street Journal, August 26, 2010). In 2009, more than 21,000 disabled people complained to Equal Employment Opportunity Commission (EEOC) about their experience of employment discrimination, an increase of 10 percent and 20 percent over the numbers of 2008 and 2007 (The World Journal, September 25, 2010).

Proportion of American people living in poverty has risen to a record high. The U.S. Census Bureau reported on September 16, 2010 that a total of 44 million Americans found themselves in poverty in 2009, four million more than that of 2008. The share of residents in poverty climbed to 14.3 percent in 2009, the highest level recorded since 1994 (The New York Times, September 17, 2010). In 2009, Mississippi’s poverty rate was 23.1 percent (www.census.gov). Florida had a total of 2.7 million people living in poverty (The Washington Post, September 19, 2010). In New York City, 18.7 percent of the population lived in poverty in 2009, as an additional 45,000 people fell below the poverty line that year (New York Daily News, September 29, 2010).

People in hunger increased sharply. A report issued by the U.S. Department of Agriculture in November 2010 showed that 14.7 percent of U.S. households were food insecure in 2009 (www.ers.usda.gov), an increase of almost 30 percent since 2006 (The Washington Post, November 21, 2010). About 50 million Americans experienced food shortage that year. The number of households collecting emergency food aid had increased from 3.9 million in 2007 to 5.6 million in 2009 (The China Press, November 16, 2010). The number of Americans participating in the food-stamp program increased from 26 million in May 2007 to 42 million in September 2010, approximately one in eight people was using food stamps (The Associated Press, October 22, 2010). In the past four years, 31.6 percent of American families tasted poverty for at least a couple of months (The Globe and Mail, September 17, 2010).

Number of homeless Americans increased sharply. According to a report by USA Today on June 16, 2010, the number of families in homeless shelters increased 7 percent to 170,129 from fiscal year 2008 through fiscal year 2009. Homeless families also were staying longer in shelters, from 30 days in 2008 to 36 in 2009, and about 800,000 American families were living with extended family, friends, or other people because of the economy. The number of homeless students in the U.S. increased 41 percent over that in the previous two years to one million (The Washington Post, September 23, 2010; USA Today, July 31, 2010). In New York City, 30 percent of homeless families in 2009 were first-time homeless (www.usatoday.com). The city’s homeless people increased to 3,111, with another 38,000 people living in shelters (The New York Times, March 19, 2010). New Orleans had 12,000 homeless people (News Week, August 23, 2010). An estimated 254,000 men, women and children experienced homelessness in Los Angeles County during some part of the year. Approximately 82,000 people were homeless on any given night. African Americans made up approximately half of the Los Angeles County homeless population, 33 percent were Latino, and a high percentage, as high as 20 percent, were veterans (www.laalmanac.com). American veterans served in the Iraq and Afghanistan wars could become homeless one year and a half after they retired, and about 130,000 retired veterans become homeless each year in the US (homepost.kpbs.org). Statistics from the National Coalition for the Homeless showed that more than 1,000 violent offences against homeless people have occurred in the U.S. which caused 291 deaths since 1999. (The New York Times, August 18, 2010)

The number of American people without health insurance increased progressively every year. According to a report by USA Today on September 17, 2010, the number of Americans without health insurance increased from 46.3 million in 2008 to 50.7 million in 2009, the ninth consecutive annual rise, which accounted for 16.7 percent of the total U.S. population. Sixty-eight adults under 65 years old died due to lack of health insurance each day on average in the US. A report from the Centers for Disease Control and Prevention (CDC) in November 2010 showed that 22 percent of American adults between 16 and 64 had no health insurance (Reuters, November 10, 2010). A report issued by the Center for Health Policy Research, University of California, Los Angeles indicated that 24.3 percent of adults under 65 in California State in 2009 had no health insurance, representing a population of 8.2 million, up from the 6.4 million in 2007. Proportion of children without health insurance in the state rose from 10.2 percent in 2007 to 13.4 percent in 2009 (The China Press, March 17, 2010, citing the Los Angeles Times).

IV. On Racial Discrimination

Racial discrimination, deep-seated in the United States, has permeated every aspect of social life.

An Associated Press-Univision Poll, reported by the Associated Press on May 20, 2010, found that 61 percent of people overall said Hispanics face significant discrimination, compared with 52 percent who said blacks do. The New York Times reported on October 28, 2010 that more than 6 in 10 Latinos in the United States say discrimination is a “major problem” for them, a significant increase in the last three years.

Minorities do not enjoy the same political status as white people. The New York city’s non-Hispanic white population is 35 percent, while more than 70 percent of the senior jobs are held by whites. Since winning a third term in November 2009, Mayor Michael R. Bloomberg has announced a parade of major appointments: bringing aboard three new deputy mayors and six commissioners. All nine are white. Of the 80 current city officials identified by the Bloomberg administration as “key members” on its Website, 79 percent are white. Of 321 people who advise the mayor or hold one of three top titles at agencies that report directly to him – commissioners, deputy commissioners and general counsels, and their equivalents – 78 percent are white. And of the 1,114 employees who must live in the city, under an executive order, because they wield the most influence over policies and day-to-day operations, 74 percent are white (The New York Times, June 29, 2010).

Minority groups confront discrimination in their employment and occupation. The black people are treated unfairly or excluded in promotion, welfare and employment (Chicago Tribune, March 12, 2010). It is reported that one-third of black people confronted discrimination at work, against which only one-sixteenth of the black people would lodge a complaint. The Washington Post reported on October 15, 2010 that about 30 black firefighters alleged systematic racial discrimination within the D.C. Department of Fire and Emergency Medical Services, claiming that black employees faced harsher discipline. Shirley Sherrod, who was black, was fired by the Agricultural Department after a blogger posted her truncated comments that 24 years ago, she did not help a white farmer when she was working for a nonprofit agency established to help black farmers. The U.S. Agriculture Department in February, 2010 reached a 1.25-billion-dollar settlement in a decades-long struggle by African-American farmers who had suffered from discrimination within farm loans (The Washington Post, July 23, 2010). The New York Times reported on September 23, 2010 that by September 30, 2009, Muslim workers had filed a record 803 claims of complaints over employment discrimination, up 20 percent from the previous year.

Minority groups have high unemployment rate. According to the U.S. Bureau of Labor Statistics, in July 2010, among the population 16 to 24 years of age, 2,987,000 unemployed people were white, with unemployment rate reaching 16.2 percent; 992,000 were black or African American people, with unemployment rate of 33.4 percent; 165,000 were Asians, with unemployment rate of 21.6 percent; 884,000 belonged to Hispanic or Latino ethnicity, with unemployment rate of 22.1 percent (www.bls.gov/news.release/pdf/youth.pdf). According to a report of the working group of experts on people of African descent to the Human Rights Council of the United Nations in August 2010, unemployment was a very serious issue for the Afro-descendant community in the United States, with levels of unemployment being, proportionately, four times higher among this population than in the white community. Reference was made to a case where the New York City Fire Department was found to have discriminated against people of African descent who had applied for employment as firemen. Of the 11,000 firemen employed by the New York City Fire Department, only about 300 were of African descent, despite their being about 27 percent of the population of New York (UN document A/HRC/15/18). Nearly one-sixth of black residents in the city were unemployed in the third quarter of 2010. About 140,000 of the city’s 384,000 unemployed residents, or 36 percent, were black (The New York Times, October 28, 2010).

Poverty proportion for minorities is also high in the United States. The U.S. Census Bureau announced in September, 2010 that the poverty proportion of the black was 25.8 percent in 2009, and those of Hispanic origin and Asian were 25.3 percent and 12.5 percent respectively, much higher than that of the non-Hispanic white at 9.4 percent. The median household income for the black, Hispanic origin and non-Hispanic white were 32,584, 38,039 and 54,461 U.S. dollars respectively (The USA Today, September 17, 2010). A survey released by the America Association of Retired Persons on February 23, 2010 found that over the previous 12 months, a third (33 percent) of African Americans age 45+ had problems paying rent or mortgage, 44 percent had problems paying for essential items, such as food and utilities, almost one in four (23 percent) lost their employer-sponsored health insurance, more than three in ten (31 percent) had cut back on their medications, and a quarter (26 percent) prematurely withdrew funds from their retirement nest eggs to pay for living expenses. Even in the tough employment environment, 12 percent of African Americans age 65+ returned to the workforce from retirement, while nearly 20 percent of African Americans age 45 to 64 increased the number of hours worked and 12 percent took a second job (The Los Angeles Times, February 23, 2010). In 2009, there were more than 30,000 black children living in poverty in the nation’s capital, almost 7,000 more than two years before. Among black children in the city, childhood poverty shot up to 43 percent, from 36 percent in 2008. In contrast, the poverty rate for Hispanic children was 13 percent, and the rate for white children was 3 percent (The Washington Post, September 29, 2010).

The U.S. minority groups face obvious inequality in education. A latest report released by America’s Promise Alliance, Civic Enterprises, and the Everyone Graduates Center at Johns Hopkins University showed that 81 percent of white, 64 percent of Hispanic, and 62 percent of African-American students graduated from high schools in 2008 (The World Journal, December 2, 2010). As of 2008, among white men aged 55 to 64, the college completion rate was 43 percent, while 19 percent of Hispanics. Among white men aged 25 to 34, the completion rate was 39 percent, compared with 14 percent of Hispanics (The Washington Post, October 20, 2010). In New York City, the number of white adults with a master degree were three times more than Hispanics. According to a report released by the Sacramento State University, only 22 percent of Latino students and 26 percent African American students completed their two-year studies in the university, compared with 37 percent of white students (The San Jose Mercury News, October 20, 2010). A report released from New York City’ s Department of Education in January 2010 found that 6,207 or 4.7 percent-out of a total of 130,837 disciplinary incidents reported in the City’s public schools during the 2008-09 school year were bias-related with gender, race/color, gender identity, gender expression, or sexual orientation (The China Press, January 18, 2010). The USA Today on October 14, 2010 reported that African American boys who were suspended at double and triple the rates of their white male peers. At the Christina School District in Delaware, 71 percent of black male students were suspended in a recent school year, compared to 22 percent of their white male counterparts. African-American students without disabilities were more than three times as likely to be expelled as their white peers. African-American students with disabilities were over twice as likely to be expelled or suspended as their white counterparts (USA Today, March 8, 2010).

The health care for African-American people is worrisome. Studies showed that nearly a third of ethnic minority families in the United States did not have health insurance. Life expectancy was lower and infant mortality higher than average (BBC, the social and economic position of minorities). Mortality of African American children was two to three times higher than that of their white counterparts. African American children represented 71 percent of all pediatric HIV/AIDS cases. African American women and men were 17 times and 7 times, respectively, more likely to contract HIV/AIDS than white people, and twice more likely to develop cancer.

Racial discrimination is evident in the law enforcement and judicial systems. The New York Times reported on May 13, 2010, that in 2009, African Americans and Latinos were 9 times more likely to be stopped by the police to receive stop-and-frisk searches than white people. Overall, 41 percent of the prison population was estimated to be African American. The rate of African Americans serving a life sentence was more than 10 times higher than that of whites. Males of African descent who dropped out of school had a 66 percent chance of ending up in jail or being processed by the criminal justice system (UN document A/HRC/15/18). A report said 85 percent of the people stopped in New York to receive stop-and-frisk searches over the past six years had been black or Latino (The Washington Post, November 4, 2010). According to a report of the Law School of the Michigan State University, among the 159 death row inmates in North Carolina, 86 were black, 61 were white and 12 were from other ethnic groups. During the trial process of the 159 capital cases, the number of black members taken out from the jury by prosecutors more than doubled that of non-black members. According to statistics from the Chicago Police Department, the proportion of black people being the criminals and the victims of all murder cases is the highest, reaching 76.3 and 77.6 percent respectively (portal.chicagopolice.org). The Homicide Report of the Los Angeles Times showed 2,329 homicides in Los Angeles County from January 1, 2007 to November 14, 2010, with victims of 1,600 Latinos and 997 black people (projects.latimes.com/homicide/map/).

Racial hate crimes are frequent. The FBI said in an annual report that out of 6,604 hate crimes committed in the United States in 2009, some 4,000 were racially motivated and nearly 1,600 were driven by hatred for a particular religion. Overall, some 8,300 people fell victim to hate crimes in 2009. Blacks made up around three-quarters of victims of the racially motivated hate crimes and Jews made up the same percentage of victims of anti-religious hate crimes. Two-thirds of the 6,225 known perpetrators of all U.S. hate crimes were white (AFP, November 22, 2010).

Immigrants’ rights and interests are not guaranteed. Lawmakers in the Arizona Senate in April 2010 passed a bill to curb illegal immigration. The law requires state and local police to determine the status of people if there is “reasonable suspicion” that they are illegal immigrants and to arrest people who are unable to provide documentation proving they are in the country legally (The Los Angeles Times, April 13, 2010). Another proposed Arizona law, supported by Republicans of the state, would deny birth certificates to children born in the United States to illegal immigrant parents (CNN U.S., June 15, 2010). A group of UN human rights experts on migrants, racism, minorities, indigenous people, education and cultural rights expressed serious concern over the laws enacted by the state of Arizona, saying that “a disturbing pattern of legislative activity hostile to ethnic minorities and immigrants has been established”. The Arizona immigration law requires state law enforcement officers to arrest a person, without a warrant. It also makes it a crime to be in the country illegally, and specifically targets day laborers, making it a crime for an undocumented migrant to solicit work, and for any person to hire or seek to hire an undocumented migrant. The law may lead to detaining and subjecting to interrogation persons primarily on the basis of their perceived ethnic characteristics. In Arizona, persons who appear to be of Mexican, Latin American, or indigenous origin are especially at risk of being targeted under the law. The Atlanta Journal-Constitution reported on November 19, 2010 that a large group of human rights organizations prepared to hold a vigil in South Georgia in support of suspected illegal immigrants being held in a prison in Lumpkin. As of September 17, 2010, the prison was holding 1,890 inmates. Court cases for inmates at the prison were pending for 63 days on average. With regard to immigration detainees, the Special Rapporteur on the human rights of migrants said, in a report to the Human Rights Council in April 2010, that he received reports of detainees being willfully and maliciously denied proper medical treatment, to which they are entitled by legislation, while they are in the custody of the national authorities. The Special Rapporteur observed during his country missions that irregular migrant workers are often homeless or living in crowded, unsafe and unsanitary conditions (UN document A/HRC/14/30).

V. On the rights of women and children

The situation regarding the rights of women and children in the United States is bothering.

Gender discrimination against women widely exists in the United States. According to a report released on August 11, 2010 by the Daily Mail, 90 percent of women have suffered some form of sexual discrimination in the workplace. Just 3 percent of Fortune 500 CEOs are women. A report by the American Association of University Women released on March 22, 2010 showed that women earned only 21 percent of doctorate degrees in computer science, around one-third of the doctorates in earth, atmospheric, and ocean sciences, chemistry, and math. Women doing the same work as men often get less payment in the United States. According to a report on September 17, 2010 by the Washington Post, in nearly 50 years, the wage gap has narrowed by only 18 cents. The census report released on September 16, 2010 showed that working women are paid only 77 cents for every dollar earned by a man. The New York Times reported on April 26, 2010 that Wal-Mart was accused of systematically paying women less than men, giving them smaller raises and offering women fewer opportunities for promotion in the biggest employment discrimination case in the nation’s history. The plaintiffs stressed that while 65 percent of Wal-Mart’s hourly employees were women, only 33 percent of the company’s managers were (The New York Times, April 26, 2010).

Women in the United States often experience sexual assault and violence. Statistics released in October 2010 by the National Institute of Justice show that some 20 million women are rape victims in the country (www.justice.gov/opa/pr/2010/october/10-ag-1220.html). About 60,000 female prisoners fall victims to sexual assault or violence every year. Some one fifth female students on campus are victims of sexual assault, and 60 percent of campus rape cases occurred in female students’ dorms (World Journal, August 26, 2010).

According to the Human Rights Watch report released in August last year, 50 detainees in the Immigration and Customs Enforcement detention centers have been alleged victims of sexual assault since 2003. Most of these victims were women, and some of the alleged assailants, including prison guards, were not prosecuted. In one case, a guard in a Texas detention center pretended to be a doctor and sexually assaulted five women in the center’s infirmary (World Journal, August 26, 2010). According to figures from Pentagon, cited by the Time magazine on March 8, 2010, nearly 3,000 female soldiers were sexually assaulted in fiscal year 2008, up 9 percent from the year before. Close to one third of the retired female soldiers said they were victims of rape or assault while they were serving.

Women are also victims of domestic violence. In the United States, some 1.3 million people fall victim to domestic violence every year, and women account for 92 percent. One in four women is a victim of domestic violence at some point during her life, and the violence kills three women each day in the United States by a current or former intimate partner (CNN, October 21, 2010). In 2008, police in the New York City received reports of more than 230,000 domestic violence cases, which equals to 600 cases per day (China Press, April 3, 2010). In all homicide cases in 2009, of the female murder victims for whom their relationships to the offenders were known, 34.6 percent were murdered by their husbands or boyfriends (www2.fbi.gov). In the Santa Clara County in California, police receive more than 4,500 domestic violence related calls every year, and more than 700 women and children live in shelters to avoid domestic violence (World Journal, October 15, 2010; China Press, October 9, 2010).

Women’s health rights are not properly protected in the United States. According to the Amnesty International, more than two women die every day in the United States from complications of pregnancy and childbirth. African-American women are nearly four times more likely to die of pregnancy-related complications than white women in the past 20 years. Native American and Alaska Native women are 3.6 times, African-American women 2.6 times and Latina women 2.5 times more likely than white women to receive no or late pre-natal care (UN document A/HRC/14/NGO/13).

Children in the U.S. live in poverty. The Washington Post reported on November 21, 2010, that nearly one in four children struggles with hunger, citing the U.S. Department of Agriculture. More than 60 percent of public school teachers identify hunger as a problem in the classroom. Roughly the same percentage go into their own pockets to buy food for their hungry students (The Washington Post, November 21, 2010). According to figures released on Sept. 16, 2010 by the U.S. Census Bureau, the poverty rate increased for children younger than 18 to 20.7 percent in 2009, up 1.7 percentage points from that in 2008 (www.census.gov). Poverty among black children in the Washington D.C. is as high as 43 percent (The Washington Post, September 29, 2010), and some 2.7 million children in California live in impoverished families. The number of poor children in six counties in the San Francisco Bay Area has increased by 15 to 16 percent. Statistics show that at least 17 million children in the United States lived in food insecure households in 2009 (World Journal, May 8, 2010).

Violence against children is very severe. Figures from the official website of Love Our Children USA show that every year over 3 million children are victims of violence reportedly and the actual number is 3 times greater. Almost 1.8 million are abducted and nearly 600,000 children live in foster care. Every day one out of seven kids and teens are approached online by predators, and one out of four kids are bullied and 43 percent of teens and 97 percent of middle schoolers are cyberbullied. Nine out of 10 LGBT students experienced harassment at school. As many as 160,000 students stay home on any given day because they’ re afraid of being bullied (www.loveourchildrenusa.org). According to a report released on October 20, 2010 by the Washington Post, 17 percent of American students report being bullied two to three times a month or more within a school semester. Bullying is most prevalent in third grade, when almost 25 percent of students reported being bullied two, three or more times a month. According to a UN report of the Special Rapporteur on the right to education, 20 states and hundreds of school districts in the United States still permit schools to administer corporal punishment in some form, and students with mental or physical disabilities are more likely to suffer physical punishment (UN document A/HRC/14/25/ADD.1).

Children’ s physical and mental health is not ensured. More than 93,000 children are currently incarcerated in the United States, and between 75 and 93 percent of children have experienced at least one traumatic experience, including sexual abuse and neglect (The Washington Post, July 9, 2010). According to a report made by the Child Fatality Review Team from the New York City Department of Health and Mental Hygiene, between 2001 and 2008, injury-related deaths among children aged one to 12 years old in the United States was 8.9 deaths per 100,000. The figure for those in the New York City was 4.2 deaths per 100,000 (China Press, July 3, 2010). Thirteen children and young adults have died at a Chicago care facility for children with severe disabilities since 2000 due to failure to take basic steps to care for them (Chicago Tribune, October 10, 2010). According to a study published on October 14, 2010 in the Journal of the American Academy of Child and Adolescent Psychiatry, about half of American teens aged between 13 and 19 met the criteria for a mental disorder. Fifty-one percent of boys and 49 percent of girls aged 13 to 19 had a mood, behavior, anxiety or substance use disorder, and the disorder in 22.2 percent of teens was so severe it impaired their daily activities (World Journal, October 15, 2010). Pornographic content is rampant on the Internet and severely harms American children. Statistics show that seven in 10 children have accidentally accessed pornography on the Internet and one in three has done so intentionally. And the average age of exposure is 11 years old – some start at eight years old (The Washington Times, June 16, 2010). According to a survey commissioned by the National Campaign to Prevent Teen and Unplanned Pregnancy, 20 percent of American teens have sent or posted nude or seminude pictures or videos of themselves. (www.co.jefferson.co.us, March 23, 2010). At least 500 profit-oriented nude chat websites were set up by teens in the United States, involving tens of thousands of pornographic pictures.

VI. On U.S. Violations of Human Rights against Other Nations

The United States has a notorious record of international human rights violations.

The U.S.-led wars in Iraq and Afghanistan have caused huge civilian casualties. A trove, released by the WikiLeaks website on October 22, 2010, reported up to 285,000 war casualties in Iraq from March 2003 through the end of 2009. The documents revealed that at least 109,000 people were killed in the Iraq war, and 63 percent of them were civilians (World Journal, October 23, 2010). In an attack in Baghdad in July 2007, an American helicopter shot and killed 12 people, among whom were a Reuters photographer and his driver (The New York Times, April 5, 2010). On February 20, 2011, a U.S. military operation in northeastern Afghanistan killed 65 innocent people, including 22 women and more than 30 children, causing the most serious civilian casualties in months (The Washington Post, February 20, 2011). According to a report in the Washington Post on October 15, 2010, Iraq’ s Human Rights Ministry reported in 2009 that 85,694 Iraqis were killed from January 2004 to October 31, 2008. Iraq Body Count, an organization based in Britain, said that a total of 122,000 civilians had been killed since the U.S. invasion of Iraq (Newsday, October 24, 2010).

The U.S. military actions in Afghanistan and other regions have also brought tremendous casualties to local people. According to a report by McClatchy Newspapers on March 2, 2010, the U.S.-led North Atlantic Treaty Organization (NATO) troops had caused 535 Afghan civilian deaths and injuries in 2009. Among them 113 civilians were shot and killed, an increase of 43 percent over 2008. Since June 2009, air strikes by the U.S. military had killed at least 35 Afghan civilians. On January 8, 2010, an American missile strike in the northwestern region of Pakistan killed four people and injured three others (The San Francisco Chronicle, January 9, 2010). During an American Special Operation in Afghanistan on February 12, five innocent civilians were shot to death, and two of them were pregnant mothers (The New York Times, April 5, 2010, page A4). On April 12, American troops raked a passenger bus near Kandahar, killing five civilians and wounding 18 others (The New York Times, April 13, 2010). The Washington Post reported on September 18, 2010, that from January 2010, a “kill team” formed by five soldiers from the 5th Stryker Combat Brigade, 2nd Infantry Division of the U.S. forces in Afghanistan, had committed at least three murders, where they randomly targeted and killed Afghan civilians, and dismembered the corpses and hoarded the human bones (The Washington Post, September 18, 2010).

The U.S. counter-terrorism missions have been haunted by prisoner abuse scandals. The United States held individuals captured during its “war on terror” indefinitely without charge or trial, according to a joint study report submitted to the United Nations Human Rights Council in May 2010 by the UN’s Special Rapporteur on the promotion and protection of human rights and fundamental freedoms while countering terrorism, the Special Rapporteur on torture and other cruel, inhuman or degrading treatment or punishment, and the Working Group on Arbitrary Detention. The report said the United States established detention centers in Guantanamo Bay and many other places in the world, keeping detainees secretly. The U.S. Central Intelligence Agency (CIA) established secret detention facilities to interrogate so-called “high-value detainees”. The study said the U.S. Principal Deputy Assistant Attorney General Stephen G. Bradbury had stated that the CIA had taken custody of 94 detainees, and had employed “enhanced techniques” to varying degrees, including stress positions, extreme temperature changes, sleep deprivation, and “waterboarding,” in the interrogation of 28 of those detainees (UN document A/HRC/13/42). The United States makes arrests outside its border under the pretext of the “war on terror.” According to a report of the Associated Press on December 9, 2010, documents released by the WikiLeaks website indicated that in 2003, some U.S. agents were involved in an abduction of a German citizen mistakenly believed to be a terrorist. The U.S. agents abducted him in Macedonia, and secretly detained him in a CIA-run prison in Afghanistan for five months. However, a top diplomat at the U.S. Embassy in Berlin warned the German government not to issue international arrest warrants against the involved CIA agents.

The United States has seriously violated the right of subsistence and right of development of Cuban residents. On October 26, 2010, the 65th session of the UN General Assembly overwhelmingly adopted a resolution entitled “Necessity of ending the economic, commercial and financial embargo imposed by the United States of America against Cuba,” the 19th such resolution in a row. Only two countries, including the United States, voted against the resolution. The blockade imposed by the United States against Cuba qualifies as an act of genocide under Article II of the Convention on the Prevention and Punishment of the Crime of Genocide, which was adopted in 1948.

The United States refuses to join several key international human rights conventions, failing to fulfill its international obligations. To date, the United States has ratified neither the International Covenant on Economic, Social and Cultural Rights, nor the Convention on the Elimination of All Forms of Discrimination against Women. In 2006, the UN General Assembly adopted the Convention on the Rights of Persons with Disabilities. Up to now 96 countries have ratified the Convention. The United States, however, has not ratified it. So far, a total of 193 countries have joined the Convention on the Rights of the Child as states parties, but the United States is among the very few countries that have not ratified it.

On August 20, 2010, the U.S. government submitted its first report on domestic human rights situation to the UN Human Rights Council. During the UN Universal Periodic Review (UPR) of the record on November 5, the United States received a record 228 recommendations by about 60 country delegations for improving its human rights situation. These recommendations referred to, inter alia, ratifying key international human rights conventions, rights of ethnic minorities and indigenous peoples, racial discriminations and Guantanamo prison. The United States, however, only accepted some 40 of them. On March 18, 2011, the UN Human Rights Council adopted the outcome of the UPR on the United States, and many countries condemned the United States for rejecting most of the recommendations. In the discussion on the United States, speakers from some country delegations expressed their regret and disappointment over the United States’ refusal of a large number of the recommendations. They noted that the United States’ commitment to the human rights area was far from satisfying, and they urged the United States to face up to its own human rights record and take concrete actions to tackle the existing human rights problems.

The above-mentioned facts illustrate that the United States has a dismal record on its own human rights and could not be justified to pose as the world’s “human rights justice.” However, it released the Country Reports on Human Rights Practices year after year to accuse and blame other countries for their human rights practices. The United States ignores its own serious human rights problems, but has been keen on advocating the so-called “human rights diplomacy,” to take human rights as a political instrument to defame other nations’ image and seek its own strategic interests. These facts fully expose its hypocrisy by exercising double standards on human rights and its malicious design to pursue hegemony under the pretext of human rights.

We hereby advise the U.S. government to take concrete actions to improve its own human rights conditions, check and rectify its acts in the human rights field, and stop the hegemonistic deeds of using human rights issues to interfere in other countries’ internal affairs.


http://en.wikipedia.org/wiki/Plug_computer

PLEASE ASSIST
http://www.kickstarter.com/projects/721744279/push-the-freedombox-foundation-from-0-to-60-in-30

Freedom Box is the name we give to a free software system built to keep your communications free and private whether chatting with friends or protesting in the street. Freedom Box software is particularly tailored to run in “plug servers,” which are compact computers that are no larger than the power adapters for electronic appliances. Located in people’s homes or offices such inexpensive servers can provide privacy in normal life, and safe communications for people seeking to preserve their freedom in oppressive regimes.

Why Freedom Box?
Because social networking and digital communications technologies are now critical to people fighting to make freedom in their societies or simply trying to preserve their privacy where the Web and other parts of the Net are intensively surveilled by profit-seekers and government agencies. Yet, instead of technology supporting these new modes of communications, smartphones, mobile tablets, and other common forms of consumer electronics are being built as “platforms” to control their users and monitor their activity. Freedom Box exists to provide people with privacy-respecting technology alternatives that enable normal communication in normal times, and that offer ways to collaborate safely and securely with others in building social networks of protest, demonstration, and mobilization for political change in the not-so-normal times. Imagine if your next wireless router, or settop box, or other small computing device came with extra features. It knew how to securely contact your friends and business associates, it stored your personal data, securely backing it up and generally maintaining your presence in the various networks you have come to rely on for communicating with people in society. Such a box would not only make your participation in network communication easier in your daily life, increasing your privacy and the security of computers in your life, it would have many unique advantages during times of crisis.

Such a box could help in disasters by creating a mesh network with your neighbors to replace the centralized internet connections that go out with the lights or are cut by hostile governments. Such a box would make it harder for governments and invasive corporate interests to reach your data and casually profile you for their own uses. Such a box would also let you lend aid to friends in need by sharing your unfettered internet access with those trapped behind government firewalls that prevent them from learning about the world or speaking plainly to it. Such boxes exist in the form of plug computers and mesh routers, tiny, inexpensive machines that can take the place of other electronics in your life, that draw so little power (often as little as 5W) that they can be run off of batteries or solar panels. We even have free software, software meant to empower and support individuals, to do all of the things mentioned above.

What we need is the glue to hold all of that together, the architecture of which pieces stack together in which way to turn a collection of possibilities into an appliance so easy to use that you forget you even have one, at least until that moment when you really need it. The FreedomBox Foundation was built to put this all together. It was started by community leaders with long track leaders and lives as a community project. But the past few months have shown us all that there are millions of people around the world who need such a device now and we need to pick up the pace and get them made so that next time, our friends have some help. That is why we are asking for your help.

In Need of Community Angels
There are many people out there, in many different communities, who feel the same way we do about profiling, internet kill switches, and the need to give people greater independence in their network communications, but turning all that interest and the offers of help into a real software suite is going to take coordination, organization, and bringing people together in focused groups to get this system built. That is why the FreedomBox Foundation was created, but it requires real work and a real demonstration of community size and support to keep everything moving. If we can meet our funding goal now, we can start doing that work full time, build road maps for the core components, and put together a series of conferences/hack days to pull the community together. The Freedom Box is a community based endeavor from the ground up. That includes everything from architecture and engineering through to administration and funding. It’s the reason why we’re seeking the first round of investment from our own community. We want it to be clear that this project begins and remains in the hands of the people who give it life at every stage and in every part of the project. Almost all the software we need to make this work is already out there in the free software world, but if we are going to pull it all together, first we need to get up to speed. Please join us and help keep the momentum going from 0 to 60!

When will we get the software?
The release timeline for this software depends a good deal on how much support we can gather this month, which is why we are reaching out now. If we can reach our goal, we hope to release a first version of the software six months later. This is our best working etimate but we will know a lot more in the next 30 days and will continue to update everyone here and on the Foundation’s website. If you are pledging enough for any of the software rewards ($50 and up), know that we hope to have everything shipped out within in week of the 0.1 release, if not on the release day itself, and please keep your eye here and on the Foundation site for updates.

What will Freedom Boxes do?
http://www.freedomboxfoundation.org/
http://www.freedomboxfoundation.org/goals/

A plug server or other digital appliance in your home running the Freedom Box software can provide many services to you and your friends, automatically and securely. The following is a short list of the services we think are important:

  • Safe social networking, in which, without losing touch with any of your friends, you replace Facebook, Flickr, Twitter and other centralized services with privacy-respecting federated services;
  • Secure backup: Your data automatically stored in encrypted format on the Freedom Boxes of your friends or associates, thus protecting your personal data against seizure or loss;
  • Network neutrality protection: If your ISP starts limiting or interfering with your access to services in the Net, your Freedom Box can communicate with your friends to detect and route traffic around the limitations. Network censorship is automatically routed around, for your friends in societies with oppressive national firewalls, or for you;
  • Safe anonymous publication: Friends or associates outside zones of network censorship can automatically forward information from people within them, enabling safe, anonymous publication;
  • Home network security, with real protection against intrusion and the security threats aimed at Microsoft Windows or other risky computers your network;
  • Encrypted email, with seamless encryption and decryption;
  • Private voice communications: Freedom Box users can make voice-over-Internet phone calls to one another or to any phone. Calls between Freedom Box users will be encrypted securely;

Freedom Boxes can do anything that computers running the Debian GNU/Linux free operating system can do, which means they have full access to thousands of applications packages. Freedom Boxes are Debian server systems specially configured to provide users with privacy-protection and safe communications services. Freedom Boxes will become more capable with time, because they can upgrade themselves safely and securely using well-tested and stable automatic upgrade mechanisms already deployed in hundreds of thousands of Debian and Debian-descended installations around the world.

POWER CONSUMPTION ONE WATT
http://www.zdnet.com/blog/networking/freedom-box-freeing-the-internet-one-server-at-a-time/698
Freeing the Internet one Server at a time
by Steven J. Vaughan-Nichols / February 16, 2011

Free software isn’t about free services or beer, it’s about intellectual freedom. As recent episodes such as censorship in China, the Egyptian government turning off the Internet, andFacebook’s constant spying, have shown, freedom and privacy on the Internet are under constant assault. Now Eben Moglen, law professor at Columbia University and renowned free software legal expert, has proposed a way to combine free software with the original peer-to-peer (P2P) design of the Internet to liberate users from the control of governments and big brother-like companies: Freedom Box.

In a recent Freedom in the Clouds speech in NYC, Moglen explained what he sees as the Internet’s current problems and his proposed solution. First, here’s the trouble with the Internet today as Moglen sees it:

[6:13] “It begins of course with the Internet. Designed as a network of peers without any intrinsic need for hierarchical or structural control and assuming that every switch in the net is an independent free standing entity who’s volition is equivalent to the human beings who control it … But it never really worked out that way.”

The Software Problem [7:18]: “It was a simple software problem and it has a simple three syllable name. Its name was ‘Microsoft’. Conceptually there was a network which was designed as a system of peer nodes, but the operating software … that came to occupy the network over the course of a decade-and-a-half was built around a very clear idea that had nothing to do with peers. It was called ’server/client architecture’.”

The Great Idea Behind Windows [9:22]: “It was the great idea of Windows, in an odd way, to create a political archetype in the net that reduced the human being to the client, and created a big centralized computer, which we might refer to as the server, that provided things to the human being on ‘take or it leave it’ terms. And unfortunately everyone took it because they didn’t know how to leave once they got in. Now, the net was made up of servers in the center and clients at the edge. Clients had quite a little power and servers had quite a lot … As storage gets cheaper, as processing gets cheaper, as complex services that scale in ways that are hard to use small computers for … the hierarchical nature of net came to seem like it was meant to be there.”

Logs [10:44]: “One more thing happened about that time … Servers began to keep logs. That’s good decision … But if you have a system which centralizes servers, and the servers centralize their logs, then you are creating vast repositories of hierarchically organized data about people at the edges of the network that they do not control, and unless they are experienced in the operation of servers, will not understand the comprehensiveness of [server-collected user data.].”

The Recipe for Disaster [12:01]: “So we built a network out of a communications architecture designed for peering, which we defined in client server style, which we then defined to be the dis-empowered client at the edge and the server in the middle. We aggregated processing and storage increasingly in the middle and we kept the logs — that is information about the flows of information in the net — in centralized places far from the human beings who controlled or at any rate thought they controlled

This ended up creating “an architecture that was very subject to misuse, indeed it was begging to be misused. Now we are getting the misuse we set up…There are a lot of reasons for making clients dis-empowered … There are many overlapping rights owners, as they see themselves, each of whom has a stake in dis-empowering a client at the edge of the network. To prevent particular hardware from being moved from one network to another, to prevent particular hardware from playing music not bought at the monopoly of music in the sky.”

In particular, Moglen has no love at all for Facebook. “The human race has susceptibility to harm but Mr. Zuckerberg has attained an unenviable record. He has done more harm to the human race than anybody else his age. Because he harnessed Friday night, that is, ‘Everybody needs to get laid,’ and turned into a structure for degenerating the integrity of human personality and he has to remarkable extent succeeded with a very poor deal, namely ‘I will give you free web-hosting and some PHP doodads and you get spying for free all the time.’ And it works.

How could that have happened? There was no architectural reason. Facebook is the web with, ‘I keep all the logs, how do you feel about that?’ It’s a terrarium for what it feels like to live in a Panopticon built out of web parts. And it shouldn’t be allowed. That’s a very poor way to deliver those services. They are grossly overpriced at ’spying all the time’, they are not technically innovative. They depend on an architecture subject to misuse and the business model that supports them is misuse. There isn’t any other business model for them. This is bad. I’m not suggesting it should be illegal. It should be obsolete. We’re technologists we should fix it.”

So, what’s the solution to this client/server architecture and all the abuses against freedom and privacy it enables? Moglen turns to inexpensive server hardware. He told the New York Times that “cheap, small, low-power plug servers,” are the start. These are small devices “the size of a cellphone charger, running on a low-power chip. You plug it into the wall and forget about it.” Almost anyone could have one of these tiny servers, which are now produced for limited purposes but could be adapted to a full range of Internet applications, he said. “They will get very cheap, very quick,” he continued, “They’re $99; they will go to $69. Once everyone is getting them, they will cost $29.”

Such plug-in servers are already shipping. They include the TonidoPlug, theSheevaPlug, and GuruPlug.

The point of these Freedom servers is to address the privacy and control issues of “social networking and digital communications technologies, [which] are now critical to people fighting to make freedom in their societies or simply trying to preserve their privacy where the Web and other parts of the Net are intensively surveilled by profit-seekers and government agencies.” This needs to be done “Because smartphones, mobile tablets, and other common forms of consumer electronics are being built as ‘platforms’ to control their users and monitor their activity.”

What runs on these plug servers is where Linux and open-source software comes in. The one firm software decision that’s been made so far is that the base operating system will be the latest release of Debian Linux This version of Debian is the one that, for better or worse, contains no proprietary hardware drivers or software.

http://www.theregister.co.uk/2011/02/17/eben_moglen_freedom_box/
You say you want a revolution?
by Dan Goodin / 17th February 2011

Concerned about Facebook, Google, and other companies that make billions brokering sensitive information, free-software champion Eben Moglen has unveiled a plan to populate the internet with tiny, low-cost boxes that are designed to preserve individuals’ personal privacy. The Freedom Box, as the chairman of the Software Freedom Law Center has christened it, would be no bigger than power adapters for electronic appliances. The inexpensive devices would be deployed in a peer-to-peer fashion in homes and offices to process email, voice-over-IP communications, and the sharing of pictures, among other things. The decentralized structure of the devices is in stark contrast to today’s biggest internet providers, which offer the same services in exchange for users turning over some of their most trusted secrets. Public enemy No. 1 is Facebook founder Mark Zuckerberg, who in Moglen’s eyes, “has done more harm to the human race than anybody else his age.”

“He has to remarkable extent succeeded with a very poor deal, namely ‘I will give you free web-hosting and some PHP doodads and you get spying for free all the time,’” Moglen said during a meeting last year of the Internet Society’s New York branch. “And it works.” As Moglen envisions them, Freedom Boxes would be used to perform a wealth of services that most of the world has been brainwashed into believing are better performed in the cloud. Secure backups that automatically store data in encrypted form would be performed on the Freedom Boxes of our friends, just as their encrypted data would be stored on ours. The boxes would also be used to send and receive encrypted email, VoIP calls, and to act as a safer alternative to social-networking sites such as Facebook and LinkedIn. The guts of the boxes would be the Debian distribution of Linux, along with countless free applications that would presumably be developed under the same model as most of today’s open source software.

The Freedom Box website gives no timeline for delivery, but Moglen told The New York Times that he could build version 1.0 in one year if he could raise “slightly north of $500,000.” The cost of plug-in devices is about $99 right now, but Moglen said they’ll eventually sell for about $29. They’ll run on a low-power chip. “You plug it into the wall and forget about it,” he told the NYT.

With Facebook and Twitter getting credit for fomenting protests and revolutions in the Middle East, Moglen says the ability to connect online carries immeasurable promise. But right now, most of the organizing is taking place on centralized, for-profit websites with ethics that can easily be compromised. “As a result of which, we are watching political movements of enormous value, capable of transforming the lives of hundreds of millions of people, resting on a fragile basis, like, for example, the courage of Mr. Zuckerberg, or the willingness of Google to resist the state, where the state is a powerful business partner and a party Google cannot afford frequently to insult.”

CONTACT
Eben Moglen
http://emoglen.law.columbia.edu/
http://www.softwarefreedom.org/about/team/#eben
email : moglen [at] columbia [dot] edu

TRANSCRIPT
http://www.softwarefreedom.org/events/2010/isoc-ny/FreedomInTheCloud-transcript.html
Software Freedom, Privacy, and Security for Web 2.0 and Cloud Computing
A Speech given by Eben Moglen at a meeting of the Internet Society’s New York branch on Feb 5, 2010

It’s a pleasure to be here. I would love to think that the reason that we’re all here on a Friday night is that my speeches are so good. I actually have no idea why we’re all here on a Friday night but I’m very grateful for the invitation. I am the person who had no date tonight so it was particularly convenient that I was invited for now.

So, of course, I didn’t have any date tonight. Everybody knows that. My calendar’s on the web.

The problem is that problem. Our calendar is on the web. Our location is on the web. You have a cell phone and you have a cell phone network provider and if your cell phone network provider is Sprint then we can tell you that several million times last year, somebody who has a law enforcement ID card in his pocket somewhere went to the Sprint website and asked for the realtime location of somebody with a telephone number and was given it. Several million times. Just like that. We know that because Sprint admits that they have a website where anybody with a law enforcement ID can go and find the realtime location of anybody with a Sprint cellphone. We don’t know that about ATT and Verizon because they haven’t told us.

But that’s the only reason we don’t know, because they haven’t told us. That’s a service that you think of as a traditional service – telephony. But the deal that you get with the traditional service called telephony contains a thing you didn’t know, like spying. That’s not a service to you but it’s a service and you get it for free with your service contract for telephony. You get for free the service of advertising with your gmail which means of course there’s another service behind which is untouched by human hands, semantic analysis of your email. I still don’t understand why anybody wants that. I still don’t understand why anybody uses it but people do, including the very sophisticated and thoughtful people in this room.

And you get free email service and some storage which is worth exactly a penny and a half at the current price of storage and you get spying all the time.

And for free, too.

And your calendar is on the Web and everybody can see whether you have a date Friday night and you have a status – “looking” – and you get a service for free, of advertising “single: looking”. Spying with it for free. And it all sort of just grew up that way in a blink of an eye and here we are. What’s that got to do with open source? Well, in fact it doesn’t have anything to do with open source but it has a whole lot to do with free software. Yet, another reason why Stallman was right. It’s the freedom right?

So we need to back up a little bit and figure out where we actually are and how we actually got here and probably even more important, whether we can get out and if so, how? And it isn’t a pretty story, at all. David’s right. I can hardly begin by saying that we won given that spying comes free with everything now. But, we haven’t lost. We’ve just really bamboozled ourselves and we’re going to have to un-bamboozle ourselves really quickly or we’re going to bamboozle other innocent people who didn’t know that we were throwing away their privacy for them forever.

It begins of course with the Internet, which is why it’s really nice to be here talking to the Internet society – a society dedicated to the health, expansion, and theoretical elaboration of a peer-to-peer network called “the Internet” designed as a network of peers without any intrinsic need for hierarchical or structural control and assuming that every switch in the Net is an independent, free-standing entity whose volition is equivalent to the volition of the human beings who want to control it.

That’s the design of the NET, which, whether you’re thinking about it as glued together with IPv4 or that wonderful improvement IPv6 which we will never use apparently, still assumes peer communications.

OF course, it never really really really worked out that way. There was nothing in the technical design to prevent it. Not at any rate in the technical design interconnection of nodes and their communication. There was a software problem. It’s a simple software problem and it has a simple three syllable name. It’s name is Microsoft. Conceptually, there was a network which was designed as a system of peer nodes but the OS which occupied the network in an increasingly – I’ll use the word, they use it about us why can’t I use it back? – viral way over the course of a decade and a half. The software that came to occupy the network was built around a very clear idea that had nothing to do with peers. It was called “server client architecture”.

The idea that the network was a network of peers was hard to perceive after awhile, particularly if you were a, let us say, ordinary human being. That is, not a computer engineer, scientist, or researcher. Not a hacker, not a geek. If you were an ordinary human, it was hard to perceive that the underlying architecture of the Net was meant to be peerage because the OS software with which you interacted very strongly instantiated the idea of the server and client architecture.

In fact, of course, if you think about it, it was even worse than that. The thing called “Windows” was a degenerate version of a thing called “X Windows”. It, too, thought about the world in a server client architecture, but what we would now think of as now backwards. The server was the thing at the human being’s end. That was the basic X Windows conception of the world. it’s served communications with human beings at the end points of the Net to processes located at arbitrary places near the center in the middle, or at the edge of the NET. It was the great idea of Windows in an odd way to create a political archetype in the Net which reduced the human being to the client and produced a big, centralized computer, which we might have called a server, which now provided things to the human being on take-it-or-leave-it terms.

They were, of course, quite take-it or leave-it terms and unfortunately, everybody took it because they didn’t know how to leave once they got in. Now the Net was made of servers in the center and clients at the edge. Clients had rather little power and servers had quite a lot. As storage gets cheaper, as processing gets cheaper, and as complex services that scale in ways that are hard to use small computers for – or at any rate, these aggregated collections of small computers for – the most important of which is search. As services began to populate that net, the hierarchical nature of the Net came to seem like it was meant to be there. The Net was made of servers and clients and the clients were the guys at the edge representing humans and servers were the things in the middle with lots of power and lots of data.

Now, one more thing happened about that time. It didn’t happen in Microsoft Windows computers although it happened in Microsoft Windows servers and it happened more in sensible OSs like Unix and BSD and other ones. Namely, servers kept logs. That’s a good thing to do. Computers ought to keep logs. It’s a very wise decision when creating computer OS software to keep logs. It helps with debugging, makes efficiencies attainable, makes it possible to study the actual operations of computers in the real world. It’s a very good idea.

But if you have a system which centralizes servers and the servers centralize their logs, then you are creating vast repositories of hierarchically organized data about people at the edges of the network that they do not control and, unless they are experienced in the operation of servers, will not understand the comprehensiveness of, the meaningfulness of, will not understand the aggregatability of.

So we built a network out of a communications architecture design for peering which we defined in client-server style, which we then defined to be the dis-empowered client at the edge and the server in the middle. We aggregated processing and storage increasingly in the middle and we kept the logs – that is, info about the flows of info in the Net – in centralized places far from the human beings who controlled or thought they controlled the operation of the computers that increasingly dominated their lives. This was a recipe for disaster.

This was a recipe for disaster. Now, I haven’t mentioned yet the word “cloud” which I was dealt on the top of the deck when I received the news that I was talking here tonight about privacy and the cloud.

I haven’t mentioned the word “cloud” because the word “cloud” doesn’t really mean anything very much. In other words, the disaster we are having is not the catastrophe of the cloud. The disaster we are having is the catastrophe of the way we misunderstood the Net under the assistance of the un-free software that helped us to understand it. What “cloud” means is that servers have ceased to be made of iron. “Cloud” means virtualization of servers has occurred.

So, out here in the dusty edges of the galaxy where we live in dis-empowered clienthood, nothing very much has changed. As you walk inward towards the center of the galaxy, it gets more fuzzy than it used to. We resolve now halo where we used to see actual stars. Servers with switches and buttons you can push and such. Instead, what has happened is that iron no longer represents a single server. Iron is merely a place where servers could be. So “cloud” means servers have gained freedom, freedom to move, freedom to dance, freedom to combine and separate and re-aggregate and do all kinds of tricks. Servers have gained freedom. Clients have gained nothing. Welcome to the cloud.

It’s a minor modification of the recipe for disaster. It improves the operability for systems that control the clients out there who were meant to be peers in a Net made of equal things.

So that’s the architecture of the catastrophe. If you think about it, each step in that architectural revolution: from a network made of peers, to servers that serve the communication with humans, to clients which are programs running on heavy iron, to clients which are the computers that people actually use in a fairly dis-empowered state and servers with a high concentration of power in the Net, to servers as virtual processes running in clouds of iron at the center of an increasingly hot galaxy and the clients are out there in the dusty spiral arms.

All of those decisions architecturally were made without any discussion of the social consequences long-term, part of our general difficulty in talking about the social consequences of technology during the great period of invention of the Internet done by computer scientists who weren’t terribly interested in Sociology, Social Psychology, or, with a few shining exceptions – freedom. So we got an architecture which was very subject to misuse. Indeed, it was in a way begging to be misused and now we are getting the misuse that we set up. Because we have thinned the clients out further and further and further. In fact, we made them mobile. We put them in our pockets and we started strolling around with them.

There are a lot of reasons for making clients dis-empowered and there are even more reasons for dis-empowering the people who own the clients and who might quaintly be thought of the people who ought to control them. If you think for just a moment how many people have an interest in dis-empowering the clients that are the mobile telephones you will see what I mean. There are many overlapping rights owners as they think of themselves each of whom has a stake in dis-empowering a client at the edge of the network to prevent particular hardware from being moved from one network to another. To prevent particular hardware from playing music not bought at the great monopoly of music in the sky. To disable competing video delivery services in new chips I founded myself that won’t run popular video standards, good or bad. There are a lot of business models that are based around mucking with the control over client hardware and software at the edge to deprive the human that has quaintly thought that she purchased it from actually occupying the position that capitalism says owners are always in – that is, of total control.

In fact, what we have as I said a couple of years ago in between appearances here at another NYU function. In fact, what we have are things we call platforms. The word “platform” like the word “cloud” doesn’t inherently mean anything. It’s thrown around a lot in business talk. But, basically what platform means is places you can’t leave. Stuff you’re stuck to. Things that don’t let you off. That’s platforms. And the Net, once it became a hierarchically architected zone with servers in the center and increasingly dis-empowered clients at the edge, becomes the zone of platforms and platform making becomes the order of the day.

Some years ago a very shrewd lawyer who works in the industry said to me “Microsoft was never really a software company. Microsoft was a platform management company”. And I thought Yes, shot through the heart.

So we had a lot of platform managers in a hierarchically organized network and we began to evolve services. “Services” is a complicated word. It’s not meaningless by any means but it’s very tricky to describe it. We use it for a lot of different things. We badly need an analytical taxonomy of “services” as my friend and colleague Philippe Aigrain in Paris pointed out some 2 or 3 years ago. Taxonomies of “services” involve questions of simplicity, complexity, scale, and control.

To take an example, we might define a dichotomy between complex and simple services in which simple services are things that any computer can perform for any other computer if it wants to and complex services are things you can’t do with a computer. You must do with clusters or structures of some computational or administrative complexity. SEARCH is a complex service. Indeed, search is the archetypal complex service. Given the one way nature of links in the Web and other elements in the data architecture we are now living with (that’s another talk, another time) search is not a thing that we can easily distribute. The power in the market of our friends at Google depends entirely on the fact that search is not easily distributed. It is a complex service that must be centrally organized and centrally delivered. It must crawl the web in a unilateral direction, link by link, figuring out where everything is in order to help you find it when you need it. In order to do that, at least so far, we have not evolved good algorithmic and delivery structures for doing it in a decentralized way. So, search becomes an archetypal complex service and it draws onto itself a business model for its monetiztion.

Advertising in the 20th century was a random activity. You threw things out and hoped they worked. Advertising in the 21st century is an exquisitely precise activity. You wait for a guy to want something and then you send him advertisements about what he wants and bingo it works like magic. So of course on the underside of a complex service called search there is a theoretically simple service called advertising which, when unified to a complex service, increases its efficiency by orders of magnitude and the increase of the efficiency of the simple service when combined with the complex one produces an enormous surplus revenue flow which can be used to strengthen search even more.

But that’s the innocent part of the story and we don’t remain in the innocent part of the story for a variety of uses. I won’t be tedious on a Friday night and say it’s because the bourgeoisie is constantly engaged in destructively reinventing and improving its own activities and I won’t be moralistic on a Friday night that you can’t do that and say because sin is in-eradicable and human beings are fallen creatures and greed is one of the sins we cannot avoid committing. I will just say that as a sort of ordinary social process we don’t stop at innocent. We go on, which surely is the thing you should say on a Friday night. And so we went on.

Now, where we went on is really towards the discovery that all of this would be even better if you had all the logs of everything because once you have the logs of everything then every simple service is suddenly a goldmine waiting to happen and we blew it because the architecture of the Net put the logs in the wrong place. They put the logs where innocence would be tempted. They put the logs where the failed state of human beings implies eventually bad trouble and we got it.

The cloud means that we can’t even point in the direction of the server anymore and because we can’t even point in the direction of the server anymore we don’t have extra technical or non-technical means of reliable control over this disaster in slow motion. You can make a rule about logs or data flow or preservation or control or access or disclosure but your laws are human laws and they occupy particular territory and the server is in the cloud and that means the server is always one step ahead of any rule you make or two or three or six or poof! I just realized I’m subject to regulation, I think I’ll move to Oceana now.

Which means that in effect, we lost the ability to use either legal regulation or anything about the physical architecture of the network to interfere with the process of falling away from innocence that was now inevitable in the stage I’m talking about, what we might call late Google stage 1.

It is here, of course, that Mr. Zuckerberg enters.

The human race has susceptibility to harm but Mr. Zuckerberg has attained an unenviable record: he has done more harm to the human race than anybody else his age.

Because he harnessed Friday night. That is, everybody needs to get laid and he turned it into a structure for degenerating the integrity of human personality and he has to a remarkable extent succeeded with a very poor deal. Namely, “I will give you free web hosting and some PHP doodads and you get spying for free all the time”. And it works.

That’s the sad part, it works.

How could that have happened?

There was no architectural reason, really. There was no architectural reason really. Facebook is the Web with “I keep all the logs, how do you feel about that?” It’s a terrarium for what it feels like to live in a panopticon built out of web parts.

And it shouldn’t be allowed. It comes to that. It shouldn’t be allowed. That’s a very poor way to deliver those services. They are grossly overpriced at “spying all the time”. They are not technically innovative. They depend upon an architecture subject to misuse and the business model that supports them is misuse. There isn’t any other business model for them. This is bad.

I’m not suggesting it should be illegal. It should be obsolete. We’re technologists, we should fix it.

I’m glad I’m with you so far. When I come to how we should fix it later I hope you will still be with me because then we could get it done.

But let’s say, for now, that that’s a really good example of where we went wrong and what happened to us because. It’s trickier with gmail because of that magical untouched by human hands-iness. When I say to my students, “why do you let people read your email”, they say “but nobody is reading my email, no human being ever touched it. That would freak me out, I’d be creeped out if guys at Google were reading my email. But that’s not happening so I don’t have a problem.”

Now, this they cannot say about Facebook. Indeed, they know way too much about Facebook if they let themselves really know it. You have read the stuff and you know. Facebook workers know who’s about to have a love affair before the people do because they can see X obsessively checking the Facebook page of Y. There’s some very nice research done a couple of years ago at an MIT I shouldn’t name by students I’m not going to describe because they were a little denting to the Facebook terms of service in the course of their research. They were just scraping but the purpose of their scraping was the demonstrate that you could find closeted homosexuals on Facebook.

They don’t say anything about their sexual orientation. Their friends are out, their interests are the interests of their friends who are out. Their photos are tagged with their friends who are out and they’re out except they’re not out. They’re just out in Facebook if anybody looks, which is not what they had in mind surely and not what we had in mind for them, surely. In fact, the degree of potential information inequality and disruption and difficulty that arises from a misunderstanding, a heuristic error, in the minds of human beings about what is and what’s not discoverable about them is not our biggest privacy problem.

My students, and I suspect many of the students of teachers in this room too, show constantly in our dialog the difficulty. They still think of privacy as “the one secret I don’t want revealed” and that’s not the problem. Their problem is all the stuff that’s the cruft, the data dandruff of life, that they don’t think of as secret in any way but which aggregates to stuff that they don’t want anybody to know. Which aggregates, in fact, not just to stuff they don’t want people to know but to predictive models about them that they would be very creeped out could exist at all. The simplicity with which you can de-anonymize theoretically anonymized data, the ease with which, for multiple sources available to you through third and fourth party transactions, information you can assemble, data maps of people’s lives. The ease with which you begin constraining, with the few things you know about people, the data available to you, you can quickly infer immense amounts more.

My friend and colleague Bradly Kuhn who works at the Software Freedom Law Center is one of those archaic human beings who believes that a social security number is a private thing. And he goes to great lengths to make sure that his Social Security is not disclosed which is his right under our law, oddly enough. Though, try and get health insurance or get a safe deposit box, or in fact, operate the business at all. We bend over backwards sometimes in the operation of our business because Bradly’s Social Security number is a secret. I said to him one day “You know, it’s over now because Google knows your Social Security number”. He said “No they don’t, I never told it to anybody”. I said, “Yeah but they know the Social Security number of everybody else born in Baltimore that year. Yours is the other one”.

And as you know, that’s true. The data that we infer is the data in the holes between the data we already know if we know enough things.

So, where we live has become a place in which it would be very unwise to say about anything that it isn’t known. If you are pretty widely known in the Net and all of us for one reason or another are pretty widely known in the Net. We want to live there. It is our neighborhood. We just don’t want to live with a video camera on every tree and a mic on every bush and the data miner beneath our feet everywhere we walk and the NET is like that now. I’m not objecting to the presence of AOL newbies in Usenet news. This is not an aesthetic judgment from 1995 about how the neighborhood is now full of people who don’t share our ethnocentric techno geekery. I’m not lamenting progress of a sort of democratizing kind. On the contrary, I’m lamenting progress of a totalizing kind. I’m lamenting progress hostile to human freedom. We all know that it’s hostile to human freedom. We all understand it’s despotic possibilities because the distopias of which it is fertile were the stuff of the science fiction that we read when we were children. The Cold War was fertile in the fantastic invention of where we live now and it’s hard for us to accept that but it’s true. Fortunately, of course, it’s not owned by the government. Well, it is. It’s fortunate. It’s true. It’s fortunate that it’s owned by people that you can bribe to get the thing no matter who you are. If you’re the government you have easy ways of doing it. You fill out a subpoena blank and you mail it.

I spent two hours yesterday with a law school class explaining in detail why the 4th Amendment doesn’t exist anymore because that’s Thursday night and who would do that on a Friday night? But the 4th Amendment doesn’t exist anymore. I’ll put the audio on the Net and the FBI and you can listen to it anytime you want.

We have to fess up if we’re the people who care about freedom, it’s late in the game and we’re behind. We did a lot of good stuff and we have a lot of tools lying around that we built over the last 25 years. I helped people build those tools. I helped people keep those tools safe, I helped people prevent the monopoly from putting all those tools in its bag and walking off with them and I’m glad the tools are around but we do have to admit that we have not used them to protect freedom because freedom is decaying and that’s what David meant in his very kind introduction.

In fact, people who are investing in the new enterprises of unfreedom are also the people you will hear if you hang out in Silicon Valley these days that open source has become irrelevant. What’s their logic? Their logic is that software as a service is becoming the way of the world. Since nobody ever gets any software anymore, the licenses that say “if you give people software you have to give them freedom” don’t matter because you’re not giving anybody software. You’re only giving them services.

Well, that’s right. Open source doesn’t matter anymore. Free software matters a lot because of course, free software is open source software with freedom. Stallman was right. It’s the freedom that matters. The rest of it is just source code. Freedom still matters and what we need to do is to make free software matter to the problem that we have which is unfree services delivered in unfree ways really beginning to deteriorate the structure of human freedom.

Like a lot of unfreedom, the real underlying social process that forces this unfreedom along is nothing more than perceived convenience.

All sorts of freedom goes over perceived convenience. You know this. You’ve stopped paying for things with cash. You use a card that you can wave at an RFID reader.

Convenience is said to dictate that you need free web hosting and PHP doodads in return for spying all the time because web servers are so terrible to run. Who could run a web server of his own and keep the logs? It would be brutal. Well, it would if it were IIS. It was self-fulfilling, it was intended to be. It was designed to say “you’re a client, I’m a server. I invented Windows 7, It was my idea. I’ll keep the logs thank you very much.” That was the industry. We built another industry. It’s in here. But it’s not in. Well, yeah it is kind of in here. So where isn’t it? Well it’s not in the personal web server I don’t have that would prevent me from falling…well, why don’t we do something about that.

What do we need? We need a really good webserver you can put in your pocket and plug in any place. In other words, it shouldn’t be any larger than the charger for your cell phone and you should be able to plug it in to any power jack in the world and any wire near it or sync it up to any wifi router that happens to be in its neighborhood. It should have a couple of USB ports that attach it to things. It should know how to bring itself up. It should know how to start its web server, how to collect all your stuff out of the social networking places where you’ve got it. It should know how to send an encrypted backup of everything to your friends’ servers. It should know how to microblog. It should know how to make some noise that’s like tweet but not going to infringe anybody’s trademark. In other words, it should know how to be you …oh excuse me I need to use a dangerous word – avatar – in a free net that works for you and keeps the logs. You can always tell what’s happening in your server and if anybody wants to know what’s happening in your server they can get a search warrant.

And if you feel like moving your server to Oceana or Sealand or New Zealand or the North Pole, well buy a plane ticket and put it in your pocket. Take it there. Leave it behind. Now there’s a little more we need to do. It’s all trivial. We need some dynamic DNS and all stuff we’ve already invented. It’s all there, nobody needs anything special. Do we have the server you can put in your pocket? Indeed, we do. Off the shelf hardware now. Beautiful little wall warts made with ARM chips. Exactly what I specked for you. Plug them in, wire them up. How’s the software stack in there? Gee, I don’t know it’s any software stack you want to put in there.

In fact, they’ll send it to you with somebody’s top of the charts current distro in it, you just have to name which one you want. Which one do you want? Well you ought to want the Debian Gnu Linux social networking stack delivered to you free, free as in freedom I mean. Which does all the things I name – brings itself up, runs it’s little Apache or lighttpd or it’s tiny httpd, does all the things we need it to do – syncs up, gets your social network data from the places, slurps it down, does your backup searches, finds your friends, registers your dynamic DNS. All is trivial. All this is stuff we’ve got. We need to put this together. I’m not talking about a thing that’s hard for us. We need to make a free software distribution device. How many of those do we do?

We need to give a bunch to all our friends and we need to say, here fool around with this and make it better. We need to do the one thing we are really really really good at because all the rest of it is done, in the bag, cheap ready. Those wall wart servers are $99 now going to $79 when they’re five million of them they’ll be $29.99.

Then we go to people and we say $29.99 once for a lifetime, great social networking, updates automatically, software so strong you couldn’t knock it over it you kicked it, used in hundreds of millions of servers all over the planet doing a wonderful job. You know what? You get “no spying” for free. They want to know what’s going on in there? Let them get a search warrant for your home, your castle, the place where the 4th Amendment still sort of exists every other Tuesday or Thursday when the Supreme Court isn’t in session. We can do that. We can do that. That requires us to do only the stuff we’re really really good at. The rest of it we get for free. Mr. Zuckerberg? Not so much.

Because of course, when there is a competitor to “all spying all the time whether you like it or not”, the competition is going to do real well. Don’t expect Google to be the competitor. That’s our platform. What we need is to make a thing that’s so greasy there will never be a social network platform again. Can we do it? Yeah, absolutely. In fact, if you don’t have a date on Friday night, let’s just have a hackfest and get it done. It’s well within our reach.

We’re going to do it before the Facebook IPO? Or are we going to wait till after? Really? Honestly? Seriously. The problem that the law has very often in the world where we live and practice and work, the problem that the law has very often, the problem that technology can solve. And the problem that technology can solve is the place where we go to the law. That’s the free software movement. There’s software hacking over here and there’s legal hacking over there and you put them both together and the whole is bigger than the sum of the parts. So, it’s not like we have to live in the catastrophe. We don’t have to live in the catastrophe. It’s not like what we have to do to begin to reverse the catastrophe is hard for us. We need to re-architect services in the Net. We need to re-distribute services back towards the edge. We need to de-virtualize the servers where your life is stored and we need to restore some autonomy to you as the owner of the server.

The measures for taking those steps are technical. As usual, the box builders are ahead of us. The hardware isn’t the constraint. As usual, nowadays, the software isn’t really that deep a constraint either because we’ve made so much wonderful software which is in fact being used by all the guys on the bad architecture. They don’t want to do without our stuff. The bad architecture is enabled, powered by us. The re-architecture is too. And we have our usual magic benefit. If we had one copy of what I’m talking about, we’d have all the copies we need. We have no manufacturing or transport or logistics constraint. If we do the job, it’s done. We scale.

This is technical challenge for social reason. It’s a frontier for technical people to explore. There is enormous social pay-off for exploring it.

The payoff is plain because the harm being ameliorated is current and people you know are suffering from it. Everything we know about why we make free software says that’s when we come into our own. It’s a technical challenge incrementally attainable by extension from where we already are that makes the lives of the people around us and whom we care about immediately better. I have never in 25 years of doing this work, I have never seen us fail to rise to a challenge that could be defined in those terms. So I don’t think we’re going to fail this one either.

Mr. Zuckerberg richly deserves bankruptcy.

Let’s give it to him. For Free.

And I promise, and you should promise too, not to spy on the bankruptcy proceeding. It’s not any of our business. It’s private.

This is actually a story potentially happy. It is a story potentially happy and if we do it then we will have quelled one more rumor about the irrelevance of us and everybody in the Valley will have to go find another buzz word and all the guys who think that Sandhill Road is going to rise into new power and glory by spying on everybody and monetizing it will have to find another line of work too, all of which is purely on the side of the angels. Purely on the side of the angels.

We will not be rid of all our problems by any means, but just moving the logs from them to you is the single biggest step that we can take in resolving a whole range of social problems that I feel badly about what remains of my American constitution and that I would feel badly about if I were watching the failure of European data protection law from inside instead of outside and that I would feel kind of hopeful about if I were, oh say, a friend of mine in China. Because you know of course we really ought to put a VPN in that wall wart.

And probably we ought to put a Tor router in there.

And of course, we’ve got bittorrent, and by the time you get done with all of that, we have a freedom box. We have a box that not merely climbs us out of the hole we’re in, we have a box that actually puts a ladder up for people who are deeper in the hole than we are, which is another thing we love to do.

I do believe the US State Department will go slanging away at the Chinese communist party for a year or two about internet freedom and I believe the Chinese communist party is going to go slanging back and what they’re going to say is “You think you’ve got real good privacy and autonomy in the internet voyear in your neighborhood?” And every time they do that now as they have been doing that in the last 2 weeks, I would say ouch if I was Hilary Clinton and I knew anything about it because we don’t. Because we don’t. It’s true. We have a capitalist kind and they have a centralist vanguard of the party sort of Marxist kind or maybe Marxist or maybe just totalitarian kind but we’re not going to win the freedom of the net discussion carrying Facebook on our backs. We’re not.

But you screw those wall wart servers around pretty thickly in American society and start taking back the logs and you want to know who I talked to on a Friday night? Get a search warrant and stop reading my email. By the way there’s my GPG key in there and now we really are encrypting for a change and so on and so on and so on and it begins to look like something we might really want to go on a national crusade about. We really are making freedom here for other people too. For people who live in places where the web don’t work.

So there’s not a challenge we don’t want to rise to. It’s one we want to rise to plenty. In fact, we’re in a happy state in which all the benefits we can get are way bigger than the technical intricacy of doing what needs to be done, which isn’t much.

That’s where we came from. We came from our technology was more free than we understood and we gave away a bunch of the freedom before we really knew it was gone. We came from unfree software had bad social consequences further down the road than even the freedom agitators knew. We came from unfreedom’s metaphors tend to produce bad technology.

In other words, we came from the stuff that our movement was designed to confront from the beginning but we came from there. And we’re still living with the consequences of we didn’t do it quite right the first time, though we caught up thanks to Richard Stallman and moving on.

Where we live now is no place we’re going to have to see our grandchildren live. Where we live now is no place we would like to conduct guided tours of. I used to say to my students how many video cameras are there between where you live and the Law school? Count them. I now say to my students how many video cameras are there between the front door to the law school and this classroom? Count them.

I now say to my students “can you find a place where there are no video cameras?” Now, what happened in that process was that we created immense cognitive auxiliaries for the state – enormous engines of listening. You know how it is if you live in an American university thanks to the movie and music companies which keep reminding you of living in the midst of an enormous surveillance network. We’re surrounded by stuff listening to and watching us. We’re surrounded by mine-able data.

Not all of that’s going to go away because we took Facebook and split it up and carried away our little shards of it. It’s not going to go away cause we won’t take free webhosting with spying inside anymore. We’ll have other work to do. And some of that work is lawyers work. I will admit that. Some of that work is law drafting and litigating and making trouble and doing lawyer stuff. That’s fine. I’m ready.

My friends an I will do the lawyers part. It would be way simpler to do the lawyer’s work if we were living in a society which had come to understand it’s privacy better. It would be way simpler to do the lawyer’s work if young people realize that when they grow up and start voting or start voting now that they’re grown up, this is an issue. That they need to get the rest of it done the way we fixed the big stuff when we were kids. We’ll have a much easier time with the enormous confusions of international interlocking of regimes when we have deteriorated the immense force of American capitalism forcing us to be less free and more surveilled for other people’s profit all the time. It isn’t that this gets all the problems solved but the easy work is very rich and rewarding right now.

The problems are really bad. Getting the easy ones out will improve the politics for solving the hard ones and it’s right up our alley. The solution is made of our parts. We’ve got to do it. That’s my message. It’s Friday night. Some people don’t want to go right back to coding I’m sure. We could put it off until Tuesday but how long do you really want to wait? You know everyday that goes by there’s more data we’ll never get back. Everyday that goes by there’s more data inferences we can’t undo. Everyday that goes by we pile up more stuff in the hands of the people who got too much. So it’s not like we should say “one of these days I’ll get around to that”. It’s not like we should say “I think I’d rather sort of spend my time browsing news about iPad”.

It’s way more urgent than that.

It’s that we haven’t given ourselves the direction in which to go so let’s give ourselves the direction in which to go. The direction in which to go is freedom using free software to make social justice.

But, you know this. That’s the problem with talking on a Friday night. You talk for an hour and all you tell people is what they know already.

So thanks a lot. I’m happy to take your questions.

http://en.wikipedia.org/wiki/Mesh_router

http://www.nap.edu/catalog.php?record_id=9860
http://www.nap.edu/catalog.php?record_id=12844


Helium-3 Mmm, polarized helium-3 and neutron spin filters

WORLD HELIUM SHORTAGE
http://www.newscientist.com/blogs/shortsharpscience/2010/01/us-sale-of-helium-criticised.html
http://www.popsci.com/science/article/2010-04/helium-3-shortage-hits-scientific-research-and-nuclear-security
http://www.independent.co.uk/news/science/take-a-deep-breath-why-the-world-is-running-out-of-helium-2059357.html
Why the world is running out of helium
by Steve Connor / 23 August 2010

It is the second-lightest element in the Universe, has the lowest boiling-point of any gas and is commonly used through the world to inflate party balloons. But helium is also a non-renewable resource and the world’s reserves of the precious gas are about to run out, a shortage that is likely to have far-reaching repercussions. Scientists have warned that the world’s most commonly used inert gas is being depleted at an astonishing rate because of a law passed in the United States in 1996 which has effectively made helium too cheap to recycle. The law stipulates that the US National Helium Reserve, which is kept in a disused underground gas field near Amarillo, Texas – by far the biggest store of helium in the world – must all be sold off by 2015, irrespective of the market price.

The experts warn that the world could run out of helium within 25 to 30 years, potentially spelling disaster for hospitals, whose MRI scanners are cooled by the gas in liquid form, and anti-terrorist authorities who rely on helium for their radiation monitors, as well as the millions of children who love to watch their helium-filled balloons float into the sky. Helium is made either by the nuclear fusion process of the Sun, or by the slow and steady radioactive decay of terrestrial rock, which accounts for all of the Earth’s store of the gas. There is no way of manufacturing it artificially, and practically all of the world’s reserves have been derived as a by-product from the extraction of natural gas, mostly in the giant oil- and gasfields of the American South-west, which historically have had the highest helium concentrations.

Liquid helium is critical for cooling cooling infrared detectors, nuclear reactors and the machinery of wind tunnels. The space industry uses it in sensitive satellite equipment and spacecraft, and Nasa uses helium in huge quantities to purge the potentially explosive fuel from its rockets. In the form of its isotope helium-3, helium is also crucial for research into the next generation of clean, waste-free nuclear reactors powered by nuclear fusion, the nuclear reaction that powers the Sun. Despite the critical role that the gas plays in the modern world, it is being depleted as an unprecedented rate and reserves could dwindle to virtually nothing within a generation, warns Nobel laureate Robert Richardson, professor of physics at Cornell University in Ithaca, New York. “In 1996, the US Congress decided to sell off the strategic reserve and the consequence was that the market was swelled with cheap helium because its price was not determined by the market. The motivation was to sell it all by 2015,” Professor Richardson said. The basic problem is that helium is too cheap. The Earth is 4.7 billion years old and it has taken that long to accumulate our helium reserves, which we will dissipate in about 100 years. One generation does not have the right to determine availability for ever.” Soon after helium mining was developed at the turn of the previous century, the US established a National Helium Reserve in 1925. During the Second World War, helium was strategically important because of its use in military airships.

When the Cold War came along, it became even more important because of its uses in the purging of rocket fuel in intercontinental ballistic missiles. The national reserve was established in the porous rock of a disused natural gasfield 30 miles north of Amarillo, which soon became known as the Helium Capital of the World. A billion cubic metres – or about half of the world’s reserves – are now stored in this cluster of mines, pipes and vats that extend underground for more than 200 miles from Amarillo to Kansas. But in 1996, the US passed the Helium Privatisation Act which directed that this reserve should be sold by 2015 at a price that would substantially pay off the federal government’s original investment in building up the reserve. The law stipulated the amount of helium sold off each year should follow a straight line with the same amount being sold each year, irrespective of the global demand for it. This, according to Professor Richardson, who won his Nobel prize for his work on helium-3, was a mistake. “As a result of that Act, helium is far too cheap and is not treated as a precious resource,” he said. “It’s being squandered.”

Professor Richardson co-chaired an inquiry into the impending helium shortage convened by the influential US National Research Council, an arm of the US National Academy of Sciences. This report, which has just been published, recommends that the US Government should revisit and reconsider its policy of selling off the US national helium reserve. “They couldn’t sell it fast enough and the world price for helium gas is ridiculously cheap,” Professor Richardson told a summer meeting of Nobel laureates from around the world at Lindau in Germany. “You might at first think it will be peculiarly an American topic because the sources of helium are primarily in the US but I assure you it matters of the rest of the world also,” he said. Professor Richardson believes the price for helium should rise by between 20- and 50-fold to make recycling more worthwhile. Nasa, for instance, makes no attempt to recycle the helium used to clean is rocket fuel tanks, one of the single biggest uses of the gas. Professor Richardson also believes that party balloons filled with helium are too cheap, and they should really cost about $100 to reflect the precious nature of the gas they contain. “Once helium is released into the atmosphere in the form of party balloons or boiling helium it is lost to the Earth forever, lost to the Earth forever,” he emphasized.

What helium is used for:
Airships – As helium is lighter than air it can be used to inflate airships, blimps and balloons, providing lift. Although hydrogen is cheaper and more buoyant, helium is preferred as it is non-flammable and therefore safer.
MRI scanners – Helium’s low boiling point makes it useful for cooling metals needed for superconductivity, from cooling the superconducting magnets in medical MRI scanners to maintaining the low temperature of the Large Hadron Collider at Cern.
Deep-sea diving – Divers and others working under pressure use mixtures of helium, oxygen and nitrogen to breathe underwater, avoiding the problems caused by breathing ordinary air under high pressure, which include disorientation.
Rockets – As well as being used to clean out rocket engines, helium is used to pressurise the interior of liquid fuel rockets, condense hydrogen and oxygen to make rocket fuel, and force fuel into the engines during rocket launches.
Dating – Helium can be used to estimate the age of rocks and minerals containing uranium and thorium by measuring their retention of helium.
Telescopes – The gas is used in solar telescopes to prevent the heating of the air, which reduces the distorting effects of temperature variations in the space between lenses.

MINING the MOON
http://www.wired.com/science/space/news/2006/12/72276
http://www.popularmechanics.com/science/space/1283056
http://www.asi.org/adb/02/09/he3-intro.html
http://www.technologyreview.com/Energy/19296/page1/
Mining the Moon
by Mark Williams / August 23, 2007

At the 21st century’s start, few would have predicted that by 2007, a second race for the moon would be under way. Yet the signs are that this is now the case. Furthermore, in today’s moon race, unlike the one that took place between the United States and the U.S.S.R. in the 1960s, a full roster of 21st-century global powers, including China and India, are competing. Even more surprising is that one reason for much of the interest appears to be plans to mine helium-3–purportedly an ideal fuel for fusion reactors but almost unavailable on Earth–from the moon’s surface. NASA’s Vision for Space Exploration has U.S. astronauts scheduled to be back on the moon in 2020 and permanently staffing a base there by 2024. While the U.S. space agency has neither announced nor denied any desire to mine helium-3, it has nevertheless placed advocates of mining He3 in influential positions. For its part, Russia claims that the aim of any lunar program of its own–for what it’s worth, the rocket corporation Energia recently started blustering, Soviet-style, that it will build a permanent moon base by 2015-2020–will be extracting He3.

The Chinese, too, apparently believe that helium-3 from the moon can enable fusion plants on Earth. This fall, the People’s Republic expects to orbit a satellite around the moon and then land an unmanned vehicle there in 2011. Nor does India intend to be left out. This past spring, its president, A.P.J. Kalam, and its prime minister, Manmohan Singh, made major speeches asserting that, besides constructing giant solar collectors in orbit and on the moon, the world’s largest democracy likewise intends to mine He3 from the lunar surface. India’s probe, Chandrayaan-1, will take off next year, and ISRO, the Indian Space Research Organization, is talking about sending Chandrayaan-2, a surface rover, in 2010 or 2011. Simultaneously, Japan and Germany are also making noises about launching their own moon missions at around that time, and talking up the possibility of mining He3 and bringing it back to fuel fusion-based nuclear reactors on Earth.

Could He3 from the moon truly be a feasible solution to our power needs on Earth? Practical nuclear fusion is nowadays projected to be five decades off–the same prediction that was made at the 1958 Atoms for Peace conference in Brussels. If fusion power’s arrival date has remained constantly 50 years away since 1958, why would helium-3 suddenly make fusion power more feasible? Advocates of He3-based fusion point to the fact that current efforts to develop fusion-based power generation, like the ITER megaproject, use the deuterium-tritium fuel cycle, which is problematical. Deuterium and tritium are both hydrogen isotopes, and when they’re fused in a superheated plasma, two nuclei come together to create a helium nucleus–consisting of two protons and two neutrons–and a high-energy neutron. A deuterium-tritium fusion reaction releases 80 percent of its energy in a stream of high-energy neutrons, which are highly destructive for anything they hit, including a reactor’s containment vessel. Since tritium is highly radioactive, that makes containment a big problem as structures weaken and need to be replaced. Thus, whatever materials are used in a deuterium-tritium fusion power plant will have to endure serious punishment. And if that’s achievable, when that fusion reactor is eventually decommissioned, there will still be a lot of radioactive waste.

Helium-3 advocates claim that it, conversely, would be nonradioactive, obviating all those problems. But a serious critic has charged that in reality, He3-based fusion isn’t even a feasible option. In the August issue of Physics World, theoretical physicist Frank Close, at Oxford in the UK, has published an article called “Fears Over Factoids” in which, among other things, he summarizes some claims of the “helium aficionados,” then dismisses those claims as essentially fantasy. Close points out that in a tokamak–a machine that generates a doughnut-shaped magnetic field to confine the superheated plasmas necessary for fusion–deuterium reacts up to 100 times more slowly with helium-3 than it does with tritium. In a plasma contained in a tokamak, Close stresses, all the nuclei in the fuel get mixed together, so what’s most probable is that two deuterium nuclei will rapidly fuse and produce a tritium nucleus and proton. That tritium, in turn, will likely fuse with deuterium and finally yield one helium-4 atom and a neutron. In short, Close says, if helium-3 is mined from the moon and brought to Earth, in a standard tokamak the final result will still be deuterium-tritium fusion.

Second, Close rejects the claim that two helium-3 nuclei could realistically be made to fuse with each other to produce deuterium, an alpha particle and energy. That reaction occurs even more slowly than deuterium-tritium fusion, and the fuel would have to be heated to impractically high temperatures–six times the heat of the sun’s interior, by some calculations–that would be beyond the reach of any tokamak. Hence, Close concludes, “the lunar-helium-3 story is, to my mind, moonshine.” Close’s objection, however, assumes that deuterium-helium-3 fusion and pure helium-3 fusion would take place in tokamak-based reactors. There might be alternatives: for example, Gerald Kulcinski, a professor of nuclear engineering at the University of Wisconsin-Madison, has maintained the only helium-3 fusion reactor in the world on an annual budget that’s barely into six figures.

Kulcinski’s He3-based fusion reactor, located in the Fusion Technology Institute at the University of Wisconsin, is very small. When running, it contains a spherical plasma roughly 10 centimeters in diameter that can produce sustained fusion with 200 million reactions per second. To produce a milliwatt of power, unfortunately, the reactor consumes a kilowatt. Close’s response is, therefore, valid enough: “When practical fusion occurs with a demonstrated net power output, I–and the world’s fusion community–can take note.” Still, that critique applies equally to ITER and the tokamak-based reactor effort, which also haven’t yet achieved breakeven (the point at which a fusion reactor produces as much energy as it consumes). What’s significant about the reactor in Wisconsin is that, as Kulcinski says, “We are doing both deuterium-He3 and He3-He3 reactions. We run deuterium-He3 fusion reactions daily, so we are very familiar with that reaction. We are also doing He3-He3 because if we can control that, it will have immense potential.”

The reactor at the Fusion Technology Institute uses a technology called inertial electrostatic confinement (IEC). Kulcinski explains: “If we used a tokamak to do deuterium-helium-3, it would need to be bigger than the ITER device, which already is stretching the bounds of credibility. Our IEC devices, on the other hand, are tabletop-sized, and during our deuterium-He3 runs, we do get some neutrons produced by side reaction with deuterium.” Nevertheless, Kulcinski continues, when side reactions occur that involve two deuterium nuclei fusing to produce a tritium nucleus and proton, the tritium produced is at such a higher energy level than the confinement system that it immediately escapes. “Consequently, the radioactivity in our deuterium-He3 system is only 2 percent of the radioactivity in a deuterium-tritium system.” More significant is the He3-He3 fusion reaction that Kulcinski and his assistants produce with their IEC-based reactor. In Kulcinski’s reactor, two helium-3 nuclei, each with two protons and one neutron, instead fuse to produce one helium-4 nucleus, consisting of two protons and two neutrons, and two highly energetic protons. “He3-He3 is not an easy reaction to promote,” Kulcinski says. “But He3-He3 fusion has the greatest potential.” That’s because helium-3, unlike tritium, is nonradioactive, which, first, means that Kulcinski’s reactor doesn’t need the massive containment vessel that deuterium-tritium fusion requires. Second, the protons it produces–unlike the neutrons produced by deuterium-tritium reactions–possess charges and can be contained using electric and magnetic fields, which in turn results in direct electricity generation. Kulcinski says that one of his graduate assistants at the Fusion Technology Institute is working on a solid-state device to capture the protons and convert their energy directly into electricity.

Still, Kulcinski’s reactor proves only the theoretical feasibility and advantages of He3-He3 fusion, with commercial viability lying decades in the future. “Currently,” he says, “the Department of Energy will tell us, ‘We’ll make fusion work. But you’re never going to go back to the moon, and that’s the only way you’ll get massive amounts of helium-3. So forget it.’ Meanwhile, the NASA folks tell us, ‘We can get the helium-3. But you’ll never get fusion to work.’ So DOE doesn’t think NASA can do its job, NASA doesn’t think that DOE can do its job, and we’re in between trying to get the two to work together.” Right now, Kulcinski’s funding comes from two wealthy individuals who are, he says, only interested in the research and without expectation of financial profit. Overall, then, helium-3 is not the low-hanging fruit among potential fuels to create practical fusion power, and it’s one that we will have to reach the moon to pluck. That said, if pure He3-based fusion power is realizable, it would have immense advantages.

HELIUM-3
http://www.engr.wisc.edu/ep/faculty/kulcinski_gerald.html#interests
http://www.thespacereview.com/article/536/1
http://www.wired.com/wired/archive/8.08/helium.html
Helium Shortage?
by Emily Jenkins / Aug 2000

There are two kinds of stable helium. You know the first one: It puts lift in birthday balloons, Thanksgiving Day parades, the Goodyear blimp. The other kind, an isotope called helium-3, may not be as familiar. It’s a naturally occurring, but very rare, variant of helium that is missing a neutron. Helium-3 is the fuel for a form of nuclear fusion that, in theory, could provide us with a clean, virtually infinite power source. Gerald Kulcinski, director of the University of Wisconsin’s Fusion Technology Institute, is already halfway there. Kulcinski is in charge of an “inertial electrostatic confinement device,” an experimental low-power reactor that has successfully performed continuous deuterium-helium-3 fusion – a process that produces less waste than the standard deuterium-tritium fusion reaction. The next step, pure helium-3 fusion (3He-3He) is a long way off, but it’s worth the effort, says Kulcinski. “You’d have a little residual radioactivity when the reactor was running, but none when you turned it off. It would be a nuclear power source without the nuclear waste.”

If we ever achieve it, helium-3 fusion will be the premier rocket fuel for centuries to come. The same lightness that floats CargoLifter’s CL160 will allow helium to provide more power per unit of mass than anything else available. With it, rockets “could get to Mars in a weekend, instead of seven or eight months,” says Marshall Savage, an amateur futurist and the author of The Millennial Project: Colonizing the Galaxy in Eight Easy Steps. The problem? We may run out of helium – and therefore helium-3 – before the fusion technology is even developed. Nearly all of the world’s helium supply is found within a 250-mile radius of Amarillo, Texas (the Helium Capital of the World). A byproduct of billions of years of decay, helium is distilled from natural gas that has accumulated in the presence of radioactive uranium and thorium deposits. If it’s not extracted during the natural gas refining process, helium simply soars off when the gas is burned, unrecoverable.

The federal government first identified helium as a strategic resource in the 1920s; in 1960 Uncle Sam began socking it away in earnest. Thirty-two billion cubic feet of the gas are bunkered underground in Cliffside, a field of porous rock near Amarillo. But now the government is getting out of the helium business, and it’s selling the stockpile to all comers. Industrial buyers use the gas primarily for arc welding (helium creates an inert atmosphere around the flame) and leak detection (hydrogen has a smaller atom, but it usually forms a diatomic molecule, H2). NASA uses it to pressurize space shuttle fuel tanks: The Kennedy Space Center alone uses more than 75 million cubic feet annually. Liquid helium, which has the lowest melting point of any element (-452 degrees Fahrenheit), cools infrared detectors, nuclear reactors, wind tunnels, and the superconductive magnets in MRI equipment. At our current rate of consumption, Cliffside will likely be empty in 10 to 25 years, and the Earth will be virtually helium-free by the end of the 21st century. “For the scientific community, that’s a tragedy,” says Dave Cornelius, a Department of Interior chemist at Cliffside. “It would be a shame to squander it,” agrees Kulcinski.

For helium-3’s true believers – the ones who think the isotope’s fusion power will take us to the edge of our solar system and beyond – talk of the coming shortage is overblown: There’s a huge, untapped supply right in our own backyard. “The moon is the El Dorado of helium-3,” says Savage, and he’s right: Every star, including our sun, emits helium constantly. Implanted in the lunar soil by the solar wind, the all-important gas can be found on the moon by the bucketful. Associate professor Tim Swindle and his colleagues at the Lunar and Planetary Laboratory at the University of Arizona have already begun prospecting. Swindle has mapped likely helium-3 deposits on the moon by charting the parts of the lunar landscape most exposed to solar wind against the locations of mineral deposits that best trap the element. But, says Swindle, when we really want a lot – when we’re rocketing to the Red Planet and back for Labor Day weekend – the best place to gas up won’t be the moon: “The really big source of it is way out.” In our quest for helium-3, we’ll travel to Uranus and Neptune, whose helium-rich atmospheres are very similar in chemical composition to the sun’s. If futurists like Swindle and Savage are right, the gas will be our reason for traveling to our solar system’s farthest reaches – and our means of getting there.

the NATIONAL HELIUM RESERVE
http://en.wikipedia.org/wiki/National_Helium_Reserve
http://www.geocities.com/CapeCanaveral/2216/pagetwo.htm
http://www.geocities.com/CapeCanaveral/2216/index.html
http://www.nytimes.com/1997/10/08/us/closing-of-helium-reserve-raises-new-issues.html
Closing of Helium Reserve Raises New Issues
by Sam Howe Verhovek  /  October 8, 1997

Of all the Federal programs that have ever come under attack, perhaps none has been more ridiculed or more reviled than the national helium reserve, here on the high plains of the Texas Panhandle. It is a collection of pipelines and pumps and vats and, most of all, a seemingly staggering amount of helium: 31 billion cubic feet, enough to supply current Federal needs for 100 years. ”Amazingly stupid, even by Government standards,” P. J. O’Rourke, the conservative humorist, said of the program, which forces Federal agencies to buy helium at inflated prices from the reserve. ”The poster child of Government waste,” said Christopher Cox, the California Congressman who led the fight to get rid of this veritable Fort Knox of helium.

But now that President Clinton has signed a bill that will get the Government out of the helium business and sell off the nation’s helium reserve to private industry, which has long claimed that it can supply helium more cheaply to agencies like NASA, the issue is turning out to be more complicated. In a vivid demonstration that cutting the Federal budget is rarely as easy or as simple as it seems, some experts are even daring to say it: maybe the helium reserve wasn’t such a dumb idea after all.

The jury is still out on just how much money will be saved by closing the operation near here, in part because the new law, for reasons that might prove daunting even for a Nobel laureate in economics, still requires the Government to pay an inflated price for helium. In some of the first contracts signed for privately supplied helium, irritated National Aeronautics and Space Administration officials note that the price, around $70 per thousand cubic feet, is roughly the same that they paid for helium from the reserve.

The American Physical Society, a prominent group of physicists, warns that getting rid of the nation’s helium stockpile is profoundly shortsighted. Though most people may think of helium as the thing that fills balloons and blimps, it is essential in all kinds of scientific pursuits, including the space program. For future generations, scientists say, it will be vital in the development of superconducting power lines, magnetically levitated trains, new kinds of generators and motors, and technology not yet even dreamed of. No one is predicting that the Government’s helium operation, in tumbleweed country about 25 miles north of Amarillo, will be magically revived. ”Everything you see here — it’s all going to go,” said Robert Robertson, an operator in the plant’s control room. ”The death warrant has been signed.” Nonetheless, even a cursory examination of the privatization of the Federal helium program, which the President set into motion when he signed the law a year ago, suggests that so far, instead of saving money, it has led to a messy accounting quandary in which the benefits are not yet clear.

Because the stores here are so large, the law requires that the helium, stored in a massive underground dome, be sold off slowly, over the next two decades, so as not to disrupt prices in the growing world market for helium. And in what, in effect, creates a secondary market in which Government agencies will bid for helium at above-market prices, the helium must be sold at prices that will fully pay off the $1.4 billion ”debt” the helium conservation program has accumulated since President John F. Kennedy helped begin it in the 1960’s so the nation’s space program would have a reliable supply. But because the debt is actually money that is owed by one Government agency to another, paying it off is basically a paper transaction intended to clear the helium reserve’s ledger. The Congressional Budget Office has already ruled that paying off the helium program’s debt will not do anything to reduce the national debt, currently at $5.3 trillion or so.

The bottom line, of course, is just how much money the Government will save by buying helium from private suppliers like the Exxon Corporation. Even the Helium Advisory Council, the industry group that has lobbied vigorously for privatization, says it is not easy to calculate the saving, partly because the new law has not yet cleared the way for the true privatization of the helium program, which would mean selling at market prices. Carl Johnson, chairman of the council, predicts that the closing will save money. But when he was asked just how much taxpayers would save annually and when they would start seeing the saving, he said, ”It’s a very difficult question, and I don’t even know how I would begin to answer it.” Representative Cox, a Republican from Orange County, Calif., who led the crusade to kill the helium program, was more definitive, saying the saving would eventually amount to about $24 million a year: $20 million from the greater efficiencies at private plants, compared with the antiquated complex here, and $4 million from lower helium costs.

But NASA, the main Federal recipient of helium, has yet to save any money because of the privatization. ”We were all in favor of helium privatization, but we missed something here,” said Steve Parker, a procurement official at the Kennedy Space Center in Cape Canaveral, Fla. ”Your question is, are we getting the savings we were promised? That’s a no. We’re still paying inflated prices for the accrued debt.” Meanwhile, because nobody knows what will happen to the world market price for helium in coming decades, no one can say for sure whether selling off the national reserve is a good idea in the long run. ”What it really boils down to is this: Do you think this is true debt that is costing the American taxpayers, or is it a cost of a strategic decision to conserve crude helium?” said Timothy R. Spisak, general manager of operations of the helium program here. ”Remember, you’ve still got an asset out here, 30 billion cubic feet of helium. If you sell it off, you don’t have it anymore.”

Colorless, odorless and largely inert, helium is unique among Earth’s 100 or so elements because it remains liquid even at just above absolute zero, which is roughly 460 degrees Fahrenheit. That makes it extremely useful as a pressurizer and a coolant. Robert L. Park, a professor of physics at the University of Maryland and the director of the Washington office of the American Physical Society, said that helium would have vastly increased uses in the future and that selling off the Federal reserve might one day be seen as a catastrophically heedless decision. He urged Congress to find some way to mandate an increase in the size of national reserves, even if they are held by private industry.

The supply-and-demand equation involving helium, which is nonrenewable, is extremely complex. The problem is that helium is a byproduct of natural gas and that it is not always economical for companies to extract it. Currently, only about half of the 6.7 billion cubic feet of helium taken out of the earth each year is separated from natural gas and saved. The rest disappears into the atmosphere. But critics of the Government reserve program say concerns about the current loss of helium are overblown. They say there is no reason that the future demand for helium cannot be met by private industry, which already supplies 90 percent of the helium used in the United States. “‘The physicists are right and more expert on the value to science of helium than any source you could consult,” Representative Cox said. ”But the physicists are not experts on economics and markets. And a great deal of what’s at stake here is the latter and not the former.”

In the Texas Panhandle, where the helium operation’s staff of 165 will be whittled to a skeleton crew of about three dozen in the next few years, there has long been a sense of local pride in the program and outrage over the national scorn heaped upon it. ”The public’s been misinformed,” said Trooper Barker, a worker at the plant. ”They think it’s all some big joke about putting gas in blimps. Well, I’ve never once had a blimp fly out here and say, ‘O.K., fill ‘er up.’ ” Mr. Barker said that once private industry took over the helium, it would find ways to raise the price, an opinion widely shared in Amarillo. ”If NASA calls tonight and says, ‘We need 20 tank cars,’ we’ll get it out of our plant tonight,” said Terry Byrd, the production and maintenance manager, during a tour of the site. ”Private industry might charge a premium to do that.”

The helium program has had its defenders over the years, but the widespread national criticism has often made them seem to be voices in the wilderness. In a column two years ago, Gregory Curtis, the editor of Texas Monthly magazine, said that the derision was undeserved and that the helium conservation program was ”in fact an example of government working at its best.” Mr. Curtis said workers and managers at the helium program were ”intelligent, efficient and proud of their work, exactly the opposite of the thick and lazy bureaucrats Federal
workers are often said to be.”

The program has often been on the verge of elimination. In 1993, Bill Sarpalius, a Democrat who was Amarillo’s Congressman, persuaded President Clinton to keep the program alive. The President, struggling to gather a majority for his budget bill, spoke to Mr. Sarpalius four times on the day of the vote. ”Sure I talked to the President about helium,” Mr. Sarpalius, who was later defeated for re-election, said at the time. ”I talk to everyone I can in the Government about helium. And when I had the opportunity to explain to him that this was not really a billion-dollar loss, that this is a program that makes money for the Federal Government, that there’s another side to this picture, he was fascinated by it. He was really interested in helium.”

Mr. Sarpalius voted with the President, and the program was spared another year. But in 1996, with a conservative Republican Congressman, William M. Thornberry, now representing Amarillo and sentiment rising against the program, its gradual elimination was approved. Sometime around 2015, all the helium now in the Federal reserve is expected to be owned by private industry. ”There will be savings,” said Representative Cox, who is the father of 3- and 4-year-olds. ”We won’t know how much until my kids are out of college.”

MACY’S DAY PARADE HOARDING
http://www.photonics.com/content/news/2007/October/19/89406.aspx
Helium Demand Ballooning / Oct. 19, 2007

The worldwide shortage of helium is resulting in rising prices and tight supplies for party supply stores, but it won’t deflate Macy’s annual tradition of floating gigantic characters down Broadway in New York City this Thanksgiving. An international helium shortage, warned about for years, has become more evident recently, industry experts said, as rising global demands for the lighter-than-air, nonflammable gas mean short supplies for low-priority, consumer-level uses. While helium is the second most abundant element in the universe, it is hard to find on Earth, where it is a byproduct of radioactive decay underground. Here, helium is extracted from natural gas. While all natural gas contains at least trace quantities of helium, the gas is distilled from only about seven percent of the natural gas extracted from the ground, and only a few plants worldwide have the capability of separating helium from other gases and purifying it. In the US, purified helium is commercially recovered from natural gas deposits mostly in Texas, Oklahoma and Kansas. It was first discovered in 1903 when an exploratory well in Kansas produced a gas that “refused” to burn. Some of the richest sources are under the Texas Panhandle.

Most people’s familiarity with helium may be through its use in festive balloons, which accounts for about seven percent of the helium market worldwide, but the vast majority of supplies of the gas are for more high-tech applications. Helium is essential for things that require its unique properties — its inertness, its incredibly low “boiling point” (-451.48 °F) and its high thermal conductivity. It exists as a gas except under extreme conditions. At temperatures close to absolute zero (-459.7 °F), helium is a fluid; most materials are solid when cooled to such low temperatures. Liquid helium is used to supercool magnets in MRI (magnetic resonance imaging) machines, representing 20 percent of all helium use globally. Liquid helium is also used to cool some thermographic cameras, which detect heat instead of visible light and are used by search-and-rescue teams can locate people among rubble or through smoke. Another 17 percent of the helium produced globally is used to provide an inert gas shield for laser welding.

Other applications of helium include: in supersonic wind tunnels; to provide lift for high-altitude scientific research balloons; to pressurize space-shuttle fuel tanks; in fiber optics, semiconductor, computer chip and flat-panel display manufacturing; as a protective gas in growing silicon and germanium crystals and in titanium and zirconium production; to create a nitrogen-free atmosphere, when mixed with oxygen, for deep-sea divers so they won’t suffer from “the bends;” in the study of superconductivity and to create superconductive magnets for particle physics research; and in metallurgy and analytical chemistry and in leak detection. Because helium won’t become radioactive, it is also used as a cooling medium for nuclear reactors.

The first laser invented, a helium-neon laser, is used today in laser eye surgery and laser pointers. The shortage is a result of a “perfect storm” of problems, with a new plant in Algeria ramping up production later than anticipated and with half the expected capacity, a plant in Qatar coming online slower than expected, and the world’s largest source of commercial helium, the Exxon Mobil plant in Wyoming, operating at only 80 to 85 percent of capacity because of plant problems. Also, the Bureau of Land Manaqement (BLM), which provides crude helium to the refiners that supply about 40 percent of US helium production, has put restrictions on how much crude helium refiners can take out of the BLM pipeline to process, Phil Kornbluth, executive vice president of Matheson Tri-Gas Global Helium in Basking Ridge, N.J., said on National Public Radio’s “Talk of the Nation” program last week.

The US government became interested in helium during World War I as a safe, noncombustible alternative to hydrogen for use in buoyant aircraft. In 1925 Congress created a Federal Helium Program to ensure that the gas would be available to the government for defense needs. The Bureau of Mines constructed and operated a large helium extraction and purification plant just north of Amarillo beginning in 1929. From 1929-1960, the federal government was the only domestic producer of helium. Because demand for helium increased during and after World War II, the government began offering incentives to private natural gas producers to strip helium from the gas and sell it to the government. Some of this helium was used for research, the NASA space program and other applications, but most was injected into a storage facility known as the Federal Helium Reserve.

By 1990 private demand for helium far exceeded federal demand, and the 1996 Helium Privatization Act redefined the government’s role in helium production. The BLM was given the responsibility of operating the Federal Helium Reserve and providing enriched crude helium to private refiners. The BLM’s facility near Amarillo provides crude helium to refiners that supply about 40 percent of helium supplies in the US, and almost 35 percent of the world’s helium production. The government’s strategic stockpile of helium in Amarillo, which held a three-year worldwide supply, is currently being sold off and will be mostly gone by 2015, Kornbluth said.

Under the 1996 Helium Privatization Act, by 2015 the secretary of the interior is to sell 850 million standard cubic meters (scm) from the Federal Helium Reserve, leaving 17 million scm, which represents a less than two-year supply. The Federal Helium Program’s original purpose, in 1925, was to ensure supplies of helium to the federal government for defense, research, and medical purposes. Over time, the program evolved into a conservation program with a primary goal of supplying the government with high-grade helium for high-tech research and aerospace purposes.

Party supply stores and florists around the country are complaining about increased helium prices and short supplies and its affect on their bottom lines. “It’s been affecting us since September 2006, and lately it’s been getting worse,” Lisa Dyer-Love, manager of Cook’s Balloonery in Westerville, Ohio, told the Columbus Dispatch. “The price of helium has gone up several times in the past year,” Matt Johnson, manager of Gases Plus, which supplies helium to party stores, car dealers and other consumers in Montana, told the Billings Gazette. “On average, when there’s been a price increase, it’s been 15 to 20 percent.” In September, industrial gas companies in Japan announced they planned to cut helium gas supplies by as much as 30 percent following significant shortages from US suppliers, a move that could have a detrimental impact on semiconductor manufacturing and electronics production in that country.

Earlier this month, Worthington Cylinders, a Columbus, Ohio-based supplier of pressure cylinders worldwide, announced a 6 percent price increase on all of its portable party kits, called Balloon Time Helium Balloon Kits, effective Nov. 1. “The current short supply and increased demand for helium has resulted in significantly higher helium prices. As a result, the company is forced to pass on its first price increase to the market in several years,” said Dusty McClintock, Worthington Cylinders vice president of sales. “The bottom line in terms of helium supply is that there is very little excess helium refining capacity, and domestic supplies of crude helium are growing ever tighter. Until overseas plants are fully online and/or additional plants are built, we’re potentially facing additional supply disruptions, if not shortages,” stated Leslie Theiss, manager of the BLM Amarillo field office in a January 2007 article on the BLM Web site. “For 350 days last year, the BLM’s crude helium enrichment facility was operating at full capacity, supplying more than 6 million cubic feet a day or 2.1 billion cubic feet per year. We can’t increase production because this would result in adverse impacts to the gas field, wells, compressors and other equipment.”

The Macy’s Thanksgiving Day parade already has enough helium stockpiled to keep its balloons flying this November, Director of Media Relations Elina Kazan told the media recently. Macy’s has faced a helium shortage before — in 2006, parade organizers reportedly decided to use fewer balloons as a result. Also, when the gas was unexpectedly unavailable in 1958, parade organizers filled the balloons with air and suspended them from cranes, according to the Macy’s Thanksgiving Day Parade Web site.

There may be relief coming, however. Gas companies Air Products and Matheson Tri-Gas announced this week they will build a liquid helium production plant near Big Piney, Wyoming, with an initial capacity of 200 million standard cubic feet per year. Production at the plant is expected to begin in 2009. The plant will be the 10th liquid helium plant operating in the US, and the first new US facility since 2000, the companies said. The facility would process natural gas from the Riley Ridge Field in Wyoming, the second largest helium-rich natural gas field in the US. Riley Ridge is believed to contain sufficient helium reserves to support production for decades. “We are enthusiastic about developing the helium reserves at Riley Ridge. Bringing on this new source, with very long-lived helium reserves, will enable us to further diversify our helium supply and enhance our ability to reliably serve our worldwide customers,” said John Van Sloun, general manager, Helium and Rare Gases, for Air Products. “We continue to see tightness in the supply of helium in the global market. The initial helium volumes expected from Riley Ridge in 2009 are relatively small, but this important new facility can produce additional product to help meet growing global demand.” Also, it was announced last month that Australia’s first-ever helium production plant will be built in the country’s Northern Territory at Darwin after a deal was reached between gas companies there. It is believed that the project will have the capacity to meet the entire country’s helium needs and also supply export markets.


http://www.csbf.nasa.gov/balloons.html

IMPACT ASSESSMENT
The Impact of Selling the Federal Helium Reserve
http://www.nap.edu/catalog.php?record_id=9860#toc

Description
The Helium Privatization Act of 1996 (P.L. 104-273) directs the Department of the Interior to begin liquidating the U.S. Federal Helium Reserve by 2005 in a manner consistent with minimum market disruption and at a price given by a formula specified in the act. It also mandates that the Department of the Interior enter into appropriate arrangements with the National Academy of Science to study and report on whether such disposal of helium reserves will have a substantial adverse effect on U.S. scientific, technical, biomedical, or national security interests.

This report is the product of that mandate. To provide context, the committee has examined the helium market and the helium industry as a whole to determine how helium users would be affected under various scenarios for selling the reserve within the act s constraints. The Federal Helium Reserve, the Bush Dome reservoir, and the Cliffside facility are mentioned throughout this report. It is important to recognize that they are distinct entities. The Federal Helium Reserve is federally owned crude helium gas that currently resides in the Bush Dome reservoir. The Cliffside facility includes the storage facility on the Bush Dome reservoir and the associated buildings pipeline.

PRICES SOARING
http://www.signonsandiego.com/uniontrib/20071119/news_1b19helium.html
Products, research rely on element
by Bob Secter  /  November 19, 2007

Helium, the second most plentiful element in the universe, is suddenly in short supply on this planet, and that means soaring prices for a lot of things. “Some customers have told me they’re just not going to sell balloons anymore because they can’t get helium,” said Chicago party wholesaler Lee Brody. “Everybody’s scrambling.” As raw materials crises go, the helium shortage clearly takes a back seat to the global oil crunch, but its repercussions go well beyond the cost of decorating birthdays or bar mitzvahs. The shortage shines a light on an obscure federal helium program critical to feeding the world’s growing appetite. To most of us, helium is just a novelty gas that floats blimps, bobs huge latex whales over car dealers and makes your voice sound like Daffy Duck when inhaled (which experts say is a really bad idea that
could lead to a collapsed lung). Demand for the gas has taken off in industry and scientific research in recent years, and the helium squeeze is being felt everywhere from university physics labs to plants in India, China, Taiwan and Korea that make today’s hottest consumer products. Japanese helium suppliers recently warned customers in the electronics industry to prepare for supply cuts of up to 30 percent.

Helium is less dense than air, which explains why it makes balloons rise. Sound waves travel faster through it. It is also noncombustible and can be liquefied to temperatures approaching absolute zero, properties that render it ideal for cooling metals that produce superconductivity or in processes that throw off a lot of heat. It is used to make flat-panel TVs, semiconductors, optical fibers and medical MRIs, and it toughens industrial welds. NASA uses a full train car load to pressurize a liquid fuel rocket. The U.S. government is the world’s No. 1 source, sucking helium out of a Texas reservoir it began filling after World War I when dirigibles were thought to be the coming thing. That stockpile will be empty in a decade, and new overseas sources have been slow to develop. “We’re pedaling as fast as we can here, but we just can’t produce enough,” said Leslie Theiss, manager of the Federal Helium Reserve near Amarillo. “One-third of the world’s helium comes from our little place here. That’s kind of frightening.”

In today’s increasingly interdependent global marketplace, the balloon business finds itself at the bottom of the helium supply chain. What began as spot shortages last year have grown chronic this year, said Kaufman, president of the International Balloon Association, a party industry trade group. Kaufman is also co-owner of M.K. Brody, a Chicago party wholesaler that often goes through 100 cylinders of helium in a week. The firm’s distributor recently put it on a weekly allotment of 33 cylinders. A standard tank with enough helium to blow up 400 average-size balloons cost $40 five years ago but $88 today, Kaufman said. He’s been told to expect another 50 percent price increase before Christmas. Cindi Cronin, who runs a Chicago party-decor business, said it’s become kind of a scavenger hunt lately to find helium. To stretch her supplies and save money, Cronin has started diluting the helium in balloon decorations with 40 percent air. “They still float, but not as long,” she said.

Helium is abundant in space, a byproduct of the nuclear fusion of stars. On Earth, it is locked largely in natural gas deposits and typically found only at trace levels too expensive to strip out and refine. By a quirk of geology, some natural gas fields in this country are blessed with robust helium concentrations. And that has made the United States to helium production what Saudi Arabia is to oil. Some of the richest sources are in the Texas panhandle, and that is where the federal government began stockpiling the gas in 1925. The Army considered it nearly as good as hydrogen to bring giant airships aloft and much safer, an assessment tragically borne out in 1937 when the hydrogen-filled Hindenburg erupted in flames over New Jersey and killed 36 people. In the 1990s, Congress decided the government should get out of the helium business. Federal law requires the stockpile to be sold off in about 10 years.

Private industry has been slow to pick up the slack. New production facilities in the Middle East have been plagued with problems and not produced hoped-for yields. “Demand is increasing overseas, and people are starting to get nervous,” said Maura Garvey, director of market research for Cryogas International, a Massachusetts-based trade journal that closely follows helium markets. She predicts helium supplies will remain tight through at least 2010 and possibly well beyond. Back in Amarillo, Theiss fears the day of reckoning for world helium supplies might be coming a lot faster than for oil or other nonrenewable commodities. “To our knowledge, nothing has been discovered to date that has the reserves we have here,” she said. “Exports have increased 50 percent in the last five years. If you’ve got a finite amount and a lot more suddenly starts going overseas, do the math. It’s not going to be good when we’re done here.”

DELIBERATE EXTINCTION
http://www.latimes.com/news/nationworld/world/la-sci-seed-bank-ruling-20100812,0,7445908.story
Russian seed bank loses court hearing
by Rachel Bernstein / August 12, 2010

A Russian seed bank preserving more than 5,000 rare fruits and ornamental plants, including unique varieties of strawberries, plums, pears, apples and currants, moved one step closer to demolition after losing a court hearing Wednesday, in which rights to the federally-owned land were granted to a government housing development agency. The Vavilov Research Institute, which manages the bank as well as 11 other crop development and conservation facilities across Russia, immediately filed an appeal. Another hearing will follow in about a month, at which point the land’s future will be finalized. It is unlikely, however, that the ruling will be changed, said Cary Fowler, director of the Global Crop Diversity Trust, an international organization based in Rome that has led an effort to save the site. Even Sergey Alexanian, deputy director of foreign relations at the Vavilov Institute, acknowledged that the Russian Housing Development Foundation is legally in the right.

The seed bank’s final hope is to win the support of Russian President Dmitry Medvedev or Prime Minister Vladimir Putin, who have the power to overrule the court’s decision. So far, though, neither has responded to letters. “This is a bad day,” Fowler said. The seed bank, at the Pavlovsk Experimental Station about 20 miles outside St. Petersburg, is one of about 1,400 such facilities worldwide, each with its own unique collection of plants. The varieties they maintain are used by breeders to develop new strains, and also may be accessed after natural disasters to replenish crops. The Pavlovsk facility earned a special place in Russian history during the World War II siege of the city, then called Leningrad, when 12 scientists chose to starve to death rather than eat the precious seeds.


Tamara Yashkina, a researcher at the Vavilov research institute that runs the seed bank outside St. Petersburg, sorts through oat seeds. {photo by Vyacheslav Yevdokimov}

PRIVATE HOMES vs PUBLIC GOOD
http://www.latimes.com/news/science/la-sci-russian-seed-bank-20100811,0,5738442.story
Development plans threaten Russia seed bank for unique fruit varieties
by Rachel Bernstein / August 10, 2010

A tug of war between scientists and government real estate developers in Russia will determine the global future of almost 1,000 strawberry varieties, along with hundreds of strains of berries, apples, pears and plums. The threatened plants are part of a collection of rare berries and other fruits growing at the Pavlovsk Experimental Station, a seed bank that blankets over 200 acres of prime land about 20 miles outside St. Petersburg; 90% of the bank’s more than 5,000 plant varietals are found nowhere else. The station was founded in 1926 by Russian botanist Nikolai Vavilov, who is considered the father of the modern seed bank. During the World War II siege of Leningrad, as St. Petersburg was formerly called, 12 scientists at the station died of starvation rather than eat the seeds they had worked to save. Now, however, the Russian Housing Development Foundation, a government agency founded in 2008 to repurpose inefficiently used agricultural land for housing, wants to do just that with the experimental station. A government hearing on the matter is scheduled for Wednesday morning, and the ruling is expected to favor the housing developers, especially since the federal government owns the land. “Legally, they are in the right,” said Sergey Alexanian, deputy director for foreign relations at the Vavilov Research Institute of Plant Industry in St. Petersburg, which manages 12 crop development and conservation facilities across Russia, including the one facing the current threat. “But from the, can we say, moral point of view, it’s impossible to destroy the collection.”

Many Russian and international scientists use the Pavlovsk station plants as raw materials for developing new varieties, creating crops that are more productive, for example, or better adapted to a warming climate. “Saving varieties is critical for breeding,” said Kent Bradford, a plant scientist at UC Davis. “When breeders are faced with a new issue, like a disease or growing in a new area, they need to go back to that diversity to see which ones are resistant or have traits that they like.” The Pavlovsk facility is one of about 1,400 such operations in the world, operated by governments as well as universities and research institutes; their simple goal is to protect plant biodiversity. Many are in developed nations with well-established funding and are thus relatively protected, but some in less developed or more strife-torn nations are threatened or have already been destroyed by war or lack of money.

Each facility generally specializes in crops native to its region or that grow well in its climate, while others, such as the Tomato Genetics Resource Center at UC Davis, focus on particular types of plants. The best known is probably the Svalbard Global Seed Vault on the remote Norwegian island of Spitzbergen in the Arctic, which keeps frozen seeds as backup for collections around the world, but that facility’s stores are far from complete. Moreover, not all plants can grow from frozen seeds — such as most of those at the Russian station. Furthermore, there is little possibility of relocating the Russian facility. An appropriate backup site isn’t available, and moving all the plants would be expensive and labor-intensive. “These are not some boxes to move to another location; these are trees,” Alexanian said. In short, if the fields are razed, the particular varietals that grow there will be gone forever. “There’s no backup for this collection, and that’s the real tragedy of it all,” said Cary Fowler, director of the Global Crop Diversity Trust, an international organization whose mission is to conserve worldwide crop diversity. “This is extinction on a scale that I’ve not seen in my professional lifetime, and it can’t be replaced.”

OLDEST GLOBAL SEED BANK
http://www.vir.nw.ru/AEPismo.htm
http://www.guardian.co.uk/environment/2010/aug/08/pavlovsk-seed-bank-russia
Pavlovsk seed bank faces destruction
by John Vidal / 8 August 2010

Twelve Russian scientists famously chose to starve to death rather than eat the unique collection of seeds and plants they were protecting for humanity during the 900-day siege of Leningrad in the second world war. But the world’s first global seed bank now faces destruction once more, to make way for a private housing estate. The fate of the Pavlovsk agricultural station outside St Petersburg will be decided in the courts this week. If, as expected, the case goes against it then the collection of plants built up over 85 years could be destroyed within months.

At stake, say Russian and British campaigners for the station, is not just scientific history but one of the world’s largest collection of strawberries, blackcurrants, apples and cherries. Pavlovsk contains more than 5,000 varieties of seeds and berries from dozens of countries, including more than 100 varieties each of gooseberries and raspberries. More than 90% of the plants are found in no other research collection or seed bank. Its seeds and berries are thought to possess traits that could be crucial to maintaining productive fruit harvests in many parts of the world as climate change and a rising tide of disease, pests and drought weaken the varieties farmers now grow. As it is predominantly a field collection, Pavlovsk cannot be moved. Experts estimate that even if another site were available nearby, it would take many years to relocate the plants.

In what appears Kafkaesque logic, the property developers argue that because the station contains a “priceless collection”, no monetary value can be assigned to it and so it is worthless. In another nod to Kafka, the government’s federal fund of residential real estate development has argued that the collection was never registered and thus does not officially exist. “It is a bitter irony that the single most deliberately destructive act against crop diversity could be about to happen in the country that invented the modern seed bank,” said Cary Fowler, of the Global Crop Diversity Trust. “Russia taught the world about the importance of crop collections for the future of agriculture. A decision to destroy Pavlovsk would forever tarnish a cause that generations of Russian plant scientists have lived and, quite literally, died, to protect.”

The station was established in 1926 by Nikolai Vavilov, the man credited with creating the idea of seed banks as repositories of plant diversity that could be used to breed new varieties in response to threats to food production. During the siege of Leningrad, 12 scientists chose to starve while protecting the diversity amassed by Vavilov, even though the seeds of rice, peas, corn and wheat that they were protecting could have sustained them. Vavilov died of malnutrition in prison in 1943, having criticised the anti-genetic concepts of Trofim Lysenko. But Russia has since elevated him to hero status.

NIKOLAI I. VAVILOV
http://www.vir.nw.ru/history/vav_sp.htm
http://www.vir.nw.ru/history/vavilov.htm#missions
http://www.vir.nw.ru/history/vavilov.htm#expeditions
http://www.vir.nw.ru/history/vavilov.htm

Nikolai I. Vavilov was born into the family of a merchant in Moscow on November 25, 1887. In 1911, having graduated from the Agricultural Institute, Vavilov continued to work at the Department of Agriculture Proper headed by Prof. Pryanishnikov. In 1911-1912 Vavilov did practical work at the Bureau for Applied Botany and at the Bureau of Mycology and Phytopathology of the Agricultural Scientific Committee. In 1913-1914, Vavilov traveled to Europe where he studied plant immunity, mostly with Prof. W. Bateson, a co-founder of the science of genetics. In autumn 1917 the Head of the Bureau for Applied Botany Robert. E. Regel (1867-1920) supported the nomination of N.I.Vavilov, a young professor from the Saratov Higher Agricultural Courses, as Deputy Head of the Bureau. As Regel wrote in his reference letter, “In the person of Vavilov we will employ … a talented young scientist who would become the pride of national science”. Regel’s prediction turned out to be true. Since then, all Vavilov’s life and creative work have been inseparable from the world’s largest crop research institute, into which he transformed the Bureau in the 1920-30’s. Vavilov continued his investigations in Saratov where he has awarded the title of Professor of the Saratov University in 1918. During the Civil War, from 1918 to 1920, Saratov became the scientific stronghold for the Department of Applied Botany (Bureau till 1917). In 1920 Vavilov was elected head of the Department, and soon moved to Petrograd (St.Petersburg now) together with his students and associates. In 1924, the Department was transformed into the Institute of Applied Botany and new Crops (VIR since 1930), and occupied the position of the central nationwide institution responsible for collecting the world plant diversity and studying it for the purposes of plant breeding.

Vavilov is recognized as the foremost plant geographer of contemporary times. To explore the major agricultural centers in this country and abroad, Vavilov organized and took part in over 100 collecting missions. His major foreign expeditions included those to Iran (1916), the United States, Central and South America (1921, 1930, 1932), the Mediterranean and Ethiopia (1926-1927). For his expedition to Afghanistan in 1924 Vavilov was awarded the N.M.Przhevalskii Gold Medal of the Russian Geographic Society. From 1931 to 1940 Vavilov was its president. These missions and the determined search for plants were based on the Vavilov’s concepts in the sphere of evolutionary genetics, i.e. the Law of Homologous Series in Variation (1920) and the theory of the Centers of Origin of Cultivated Plants (1926). N.I.Vavilov was a prominent organizer of science. In the period from 1922 to 1929 he headed the Institute of Experimental Agronomy (the former ASC) which developed in 1930 into the V.I.Lenin All-Union Academy of Agriculture; from 1930 to 1935 Vavilov was its first president. From 1930 to 1940 he was director of the Institute of Genetics. Vavilov organized and participated in significant home and international scientific meetings and congresses on botany, genetics and plant breeding, agricultural economy, and the history of science. All around the world N.I.Vavilov has gained respect and renown; he was elected member of many academies of sciences and various foreign scientific societies.

Vavilov, the symbol of glory of the national science, is at the same time the symbol of its tragedy. As early as in the beginning of the 1930’s his scientific programs were being deprived of governmental support. In the stifling atmosphere of a totalitarian state, the institute headed by Vavilov turned into a resistance point to the pseudo-scientific concepts of Trofim D.Lysenco. As a result of this controversy, Vavilov was arrested in August 1940, and his closest associates were also sacked and imprisoned. Vavilov’s life ceased in the city where his star had once risen. He died in the Saratov prison of dystrophia on 26 January 1943 and was buried in a common prison grave. Nevertheless, the memory of Vavilov has been preserved by his followers. During that tragic period they kept on gathering Vavilov’s manuscripts, documents and pictures. Since mid-50’s, after the official rehabilitation of Vavilov, hundreds of books and articles devoted to his life and scientific accomplishments have been published. Memorial displays have been opened in Moscow, St.Petersburg, Saratov and Poltava. The name of Vavilov is born by the Russian Society of Geneticists and Breeders, the Institute of General Genetics of the Academy of Sciences, the Institute of Plant Industry, and the Saratov Agricultural Institute.


One of the 893 blackcurrant varieties in the threatened collection.

DEAR MR. PRESIDENT
http://www.croptrust.org/main/index.php?itemid=773
http://eng.letters.kremlin.ru/
http://www.change.org/croptrust/petitions/view/tell_the_president_of_russia_to_stop_the_destruction_of_the_future_of_food
http://www.huffingtonpost.com/cary-fowler/kremlinrussia-stop-the-de_b_659123.html
Why Pavlovsk Station matters
by Cary Fowler / July 26, 2010

The Pavlovsk Station matters because humanity needs crops to survive. As the climate changes and new threats to existing crop varieties appear, the ones we have now need to adapt, and the diversity found at the Pavlovsk Station provides this adaptation potential for a broad range of fruits and berries. We need to grow new breeds of all kinds of crops — grains, fruits, vegetables — to feed ourselves and our children. To do that, we need the rich diversity of characteristics like those found at Pavlovsk. It’s one of the oldest collections of fruit and berry diversity in the world, and the largest in Europe. Its strawberry collection alone contains almost a thousand varieties hailing from 40 countries. Pavlovsk Station can’t be moved. Transferring the collection to another site — even if one were available, which it’s not — would take years. If the demolition moves forward, the Trust will do what we can to mount a rescue expedition. But frankly, we will not be able to save much. The job is technically complicated and time-consuming, and quarantine regulations will slow the process down further.

What’s next?
We’re doing what we can at the Global Crop Diversity Trust. We will try to save as much diversity as possible in partnership with the dedicated staff at Pavlovsk. In the meantime, we need to bring attention to the issue, here and abroad. President Medvedev just joined Twitter last month during his trip to the United States, and he only gets 50 or so messages directed at him a day.

Medvedev’s Twitter Account : @KremlinRussia_E Mr. President, protect #Pavlovsk Station!

It may be just a start. But if we can get enough tweets, we’re hoping that someone at the Kremlin will take notice and help us save Pavlovsk Station and protect our food supply for future generations.

150 PLANTS in CULTIVATION (DOWN FROM 7000)
http://cchronicle.com/2009/11/from-india-six-lessons/
http://www.fao.org/DOCREP/004/V1430E/V1430E04.htm
http://www.nytimes.com/2005/08/17/world/europe/17iht-food.html
Crop diversity is dying
by Elisabeth Rosenthal / August 18, 2005

José Esquinas-Alcázar regards the corn laid out in rows with the love and admiration that sommeliers reserve for bottles in a fine wine cellar. To the untrained eye, it is a collection of misshapen ears: Long, short, blue, yellow, white, spotted, covered in dirt. “Look at this beauty!” he exclaims. “Some are good for starch, some for popcorn. Some grow in the cold. Some are good fried, some broiled. The taste for each is completely different. “Diversity is what makes us happy, gives us choice and keeps us free. And it’s tragic because this is what we are losing.” Esquinas, a top official at the UN Food and Agriculture Organization in Rome, has spent decades campaigning to preserve plants that are used for food, which are becoming extinct at an alarming rate. Last year, his efforts culminated in the adoption of the United Nations Treaty on Plant Genetic Resources for Food and Agriculture, which requires countries to preserve existing crops and creates an international system for sharing crops and plant genes. But much has already been lost.

Historically, humans utilized more than 7,000 plant species to meet their basic food needs, Esquinas says. Today, due to the limitations of modern large-scale, mechanized farming, only 150 plant species are under cultivation, and the majority of humans live on only 12 plant species, according to research by the Food and Agriculture Organization. Most types of food, for example the tomato, consist of several different species, and each species may contain dozens, if not hundreds, of varieties. In the last century, dozens of varieties of corn, wheat and potato have disappeared. “This is not nearly as sexy as a panda going extinct, but the losses are far more dangerous for our survival,” Esquinas said in his office on the outskirts of Rome. The result for humans is a more one-dimensional diet, where tomatoes look and taste the same and only one type of corn or potato may be available on supermarket shelves.

The consequences are potentially dire: As species drop out, the world loses the genetic diversity that has allowed farmers and scientists to breed new types of seed crops that can adapt to changing conditions – a hotter, drier growing season, for example, or the invasion of a new bacterial pest. “If you have climate change or environmental change, you need to search through those plants to find one that is adapted to the new conditions,” he said. The loss of food plant species is directly related to the 20th century “green revolution,” in which farmers adopted streamlined agricultural techniques to increase production of food. To maximize crop yields, they chose a few high-yield, uniform crops that grew predictably and could be planted and harvested mechanically. With irrigation, mechanization, fertilizers and pesticides at their disposal, farmers in developed nations were able to maintain control over growing conditions.

The result was plentiful food, but far less variety in the types of seeds and foods planted – which, occasionally, led to disastrous vulnerability. In 1970, for example, more than half of the corn crop in the southern United States succumbed to an unusual fungus because the corn was all grown from one seed type that is particularly susceptible to that disease. While modern farmers tend to favor a few crops, traditional small-scale farmers took the opposite approach: maintaining and growing a wide variety of crops and seeds in order to survive, since they had little control over things like soil, weather, and pests. To ensure there was food on the table, their best bet was to plant a range of crops – some that thrived in heat and others that could withstand cold, for example.

Their storehouses and fields were (and are) the world’s gold mine of plant genetic resources. Indeed, after the unusual fungus damaged the U.S. corn crop in 1970, scientists modified the U.S. corn seed with a gene borrowed from a type of African maize that was resistant to the fungus. But this kind of resource is being lost as land is urbanized and as traditional farming practices in Latin America and Africa fall by the wayside. Esquinas ticks off crops that have disappeared from the world’s fields: Of the nearly 8,000 varieties of apple that grew in the United States at the turn of the century, more than 95 percent no longer exist. In Mexico, only 20 percent of the corn types recorded in 1930 can now be found. Only 10 percent of the 10,000 wheat varieties grown in China in 1949 remain in use.

Paying homage to the bounty and variety of nature has been a lifelong obsession for Esquinas, who grew up in a Spanish family that had farmed for generations. In the late 1960s, he did his doctoral research on genetic diversity of the Spanish melon, traveling by bus, foot and horse to collect 370 varieties of seed from small farmers all over Spain. Later, he grew the fruits and characterized the physical and chemical differences between melon types, creating a melon family tree. More recently, at the anthropological museum in Cairo, he focused on a particular treasure from the tomb of King Tut, one that other tourists might have overlooked among the precious trinkets and gold: a small partitioned box holding more than 25 varieties of barley seed, each in its own compartment. “They recognized that these seeds were a treasure,” Esquinas says. “My conclusion as a plant geneticist is that he was buried with all these seeds because he didn’t know what kind of soil and humidity or rain there would be in the underworld!”

Today, Esquinas’s mission is to ensure that food plants are protected, both in “banks” and in the field, so that the bounty of nature – and the genetic diversity behind it – is preserved. Since many crops have already disappeared in the West, farmers in the developing world must be compensated for maintaining and sharing their plant varieties, he says. When Esquinas was collecting melon seeds, he accompanied a farmer to a remote village by donkey, where he was presented with seeds for a melon that the farmer insisted was exceptionally hearty. When he analyzed the seed back in the lab, he discovered that it was resistant to many diseases, and genes from that melon have since been introduced into numerous commercial fruits. Various institutes and universities around the world maintain seed collections. The French National Institute for Agricultural Research, for example, maintains 4,000 lines of maize. But Esquinas says that a more systematic effort is needed. Maintaining diversity in food is not just about survival, but also about the quality of life, and people must be taught to appreciate it, he said. In the past two decades, “People have learned to drink wine – to notice the distinctions: this one is smoky or sweet and that one aromatic,” he said. “But all food has variety – rice has it, potatoes have it. You don’t know a good wine the first time you drink. We need to develop our taste for foods like these, too.”


A display showing grains, honey, vegetables and fruits produced by Indian farmers in a region where traditional crop diversity is still intact.

PREVIOUSLY ON SPECTRE : GUARDED BY POLAR BEARS, FOR NOW
https://spectregroup.wordpress.com/2006/06/20/guarded-by-polar-bears-for-now/

CHARTER CITIES
http://www.chartercities.org/concept
http://www.chartercities.org/resources
http://www.chartercities.org/blog
http://www.chartercities.org/faq

THIS FIRST:
CRUCIBLES for INNOVATION
http://www.uscharterschools.org/cs/r/query/q/1558?x-title=New+Non-Federal+Research+and+Reports
Top 10 Charter Communities by Market Share
http://www.publiccharters.org/files/publications/MarketShare_P4.pdf
Equity Overlooked: Charter Schools and Civil Rights Policy
http://www.civilrightsproject.ucla.edu/research/deseg/equity-overlooked-report-2009.pdf
Center for Education Reform’s 2009 Accountability Report
http://www.edreform.com/download/CER_2009_AR_Charter_Schools.pdf
Teacher Cooperatives
http://www.hoover.org/publications/ednext/Teacher_Cooperatives.html

EXPERIMENTAL CITY-STATE, AVAILABLE for LONG LEASE, WILL BUILD to SUIT

PREVIOUSLY on SPECTRE : WILL to POWER
http://news.bbc.co.uk/2/hi/africa/6990034.stm
https://spectregroup.wordpress.com/2007/07/21/if-only-he-would-apply-himself/
Kids in Guinea Study Under Airport Lamps / by Rukmini Callimachi

The sun has set in one of the world’s poorest nations and as the floodlights come on at G’bessi International Airport, the parking lot begins filling with children. The long stretch of pavement has the feel of a hushed library, each student sitting quietly, some moving their lips as their eyes traverse their French-language notes. It’s exam season in Guinea, ranked 160th out of 177 countries on the United Nations’ development index, and schoolchildren flock to the airport every night because it’s among the only places where they’ll always find the lights on. Groups of elementary and high school students begin heading to the airport at dusk, hoping to reserve a coveted spot under the oval light cast by one of a dozen lampposts in the parking lot. Some come from over an hour’s walk away. The lot is teeming with girls and boys by the time Air France Flight 767 rounds the Gulf of Guinea at an hour-and-a-half before midnight. They hardly look up from their notes as the Boeing jet begins its spiraling descent over the dark city, or as the newly arrived passengers come out, shoving luggage carts over the cracked pavement. “I used to study by candlelight at home but that hurt my eyes. So I prefer to come here. We’re used to it,” says 18-year-old Mohamed Sharif, who sat under the fluorescent beam memorizing notes on the terrain of Mongolia for the geography portion of his college entrance test.

Only about a fifth of Guinea’s 10 million people have access to electricity and even those that do experience frequent power cuts. With few families able to afford generators, students long ago discovered the airport. Parents require girls to be chaperoned to the airport by an older brother or a trusted male friend. Even young children are allowed to stay out late under the fluorescent bulbs, so long as they return in groups. “My parents don’t worry about me because they know I’m here to seek my future,” says 10-year-old Ali Mara, busy studying a diagram of the cephalothorax, the body of an insect. They sit by age group with 7-, 8- and 9-year-olds on a curb in a traffic island and teenagers on the concrete pilings flanking the national and international terminals. There are few cars to disturb their studies. Most are working on memorizing their notes, struggling to commit to memory entire paragraphs dictated by their teachers on the history of Marxism, or the unraveling of colonial Africa, or the geology of Siberia. Tests are largely feats of memorization, a relic from Guinea’s French colonial rulers. According to U.N. data, the average Guinean consumes 89 kilowatt-hours per year – the equivalent to keeping a 60-watt light bulb burning for two months – while the typical American burns up about 158 times that much. The students at the airport consider themselves lucky. Those living farther away study at gas stations and come home smelling of gasoline. Others sit on the curbs outside the homes of affluent families, picking up the crumbs of light falling out of their illuminated living rooms. “We have an edge because we live near the airport,” says 22-year-old Ismael Diallo, a university student.

It’s an edge in preparing for an exam in a country where unemployment is rampant, inflation has pushed the price of a large bag of rice to $30 and a typical government functionary earns around $60 a month. The lack of electricity is “a geological scandal,” says Michael McGovern, a political anthropologist at Yale University, quoting a phrase first used by a colonial administrator to describe Guinea’s untapped natural wealth. The Oregon-sized territory has rivers which if properly harnessed could electrify the region, McGovern says. It has gold, diamonds, iron and half the world’s reserves of bauxite, the raw material used to make aluminum. For 23 years, the former French colony has been under the grip of Lansana Conte, a reclusive and temperamental army general who grabbed the presidency in a 1984 coup. Suffering from a heart ailment, Conte has repeatedly traveled abroad for medical treatment. Mass demonstrations earlier this year called for his resignation because of his health and the deteriorating economy, but he instead declared martial law. Eighteen-year-old Ousman Conde admits that sitting on the concrete piling is not comfortable, but says passing his upcoming exam could open doors. “It hurts,” he says, looking up from his notes on Karl Marx for the politics portion of the test. “But we prefer this hurt to the hurt of not doing well in our exams.”


the HONG KONG MODEL
http://www.newsweek.com/blogs/wealth-of-nations/2009/08/12/the-best-development-plan-in-the-world-originated-with-the-british-empire.html
The Best Development Plan in the World Originated With…the British Empire?

The secret to turning a poor nation into a rich one can’t be found in a World Bank report. It wasn’t hatched in the corridors of the International Monetary Fund, either. It came from the British Empire. That is one way, at least, of interpreting Stanford economist Paul Romer’s new plan for turning economically backward countries like Cuba into engines of growth like China. Experts have long known that the traditional tools of development don’t work: free trade, foreign investment, and charity have failed as many countries as they’ve helped. The rot in a dysfunctional country is at its core—in the laws, institutions, and informal rules that govern daily life.

How to fix a problem so fundamental? Let a rich country take over part of a poor one. The hope, says Romer, is that the superior norms of the developed country will take root abroad. He calls his plan Charter Cities and illustrates it with a thought experiment. Imagine if the U.S. closes its prison at Guantánamo Bay and hands the land over to Canada, which agrees to develop it. “A new city blossoms,” writes Romer.

It does for Cuba what Hong Kong, administered by the British, did for China; it connects Cuba to the global economy. To help the city flourish, the Canadians encourage immigration. It is a place with Canadian judges and Mounties that happily accepts millions of immigrants. Some of the new residents could be Cuban émigrés who return from North America. Others might be Haitians who come work in garment factories that firms no longer feel safe bringing into Haiti. The new city gives the Haitians their only chance to choose to live under a system of law that offers safety and opportunity.

Private contractors rush in to build airports and infrastructure, lured by the prospect of rising property values. Multinational firms open factories, attracted by the proximity to low-cost labor and the certainty of the Canadian legal system. Eventually, Cuban authorities decide to replicate the experiment across the island, opening new, Guantánamo-like “special economic zones,” much as mainland China did starting in 1979, taking the Hong Kong model to Shenzhen and beyond. When played out on a global scale, “the gains from doing this are just enormous,” says Romer.

Such a fanciful idea might be easily dismissed if it weren’t coming from such an economic heavyweight. Romer transformed the field of growth theory in the 1980s, and his name is peppered throughout macroeconomic textbooks; he’s been mentioned as a potential Nobel Prize recipient. “There’s a thin line between revolutionary and crazy,” says NYU economist and development expert William Easterly. “Paul Romer has been adept at walking that line throughout his career, staying just out of the crazy part. He’s still tiptoeing along that line with this new idea.”

Still, there’s a pie-in-the-sky grandiosity to the scheme that elides some major stumbling blocks. One problem, admits Romer, is the parallel between charter cities and colonialism. Great Britain, for instance, would surely have qualms about taking over a few hundred acres of coastline in Ghana, where the legacy of slavery is still deeply felt. Romer says the similarities are surface level only—there’s no coercion involved in a charter city since it would be founded on empty or near-empty land, and anyone who lives there would do so by choice. Charter cities would only be considered in countries that welcome them. But the colonial parallel would certainly still rankle some. One way to mitigate the PR problem would be to let a group of rich countries administer the charter area; that way, no single nation could be accused of exploiting the host.

But the image problem hints at a more basic choke point: politics. “What’s clever about Paul’s idea is he’s saying, here’s a totally brand-new government we can invent from scratch and make it compete with existing governments,” says Easterly. “Anyone who doesn’t like their existing government can move. That’s an appealing notion. We’re so sick of governments that mistreat us that it’s kind of sticking them in the eye to say, here, we’re going to come up with a new one.” But though political competition is a seductive idea, it’s also a threat to existing powers, some of whom would surely try to block it. And globally orchestrated projects have a very low success rate—just look at the molasseslike progression toward a climate-change agreement. “International politics is a swamp,” says Easterly. “Things that involve international politics do not inspire a great deal of optimism in me.”

Nonetheless, Romer is attacking the idea with the zeal of a, er, missionary. He’s left his teaching position at Stanford and founded a nonprofit to pursue Charter Cities full time. He says he’s already in talks with potential host countries, although he won’t divulge which ones. Romer is confident that, despite the challenges, we’ll see the first charter cities within a few years. For the world’s poor and oppressed, that will be none too soon.

CONTACT
Paul Romer
http://www.stanford.edu/~promer/
http://www.ted.com/speakers/paul_romer.html
email : paul.romer [at] stanford [dot] edu


students do homework under the dim lights of a parking lot at G’bessi Airport in Conakry, Guinea

HOMEWORK by STREET LIGHT
http://www.prospectmagazine.co.uk/2010/01/for-richer-for-poorer/
For richer, for poorer
by Paul Romer / 27th January 2010

Forget aid—people in the poorest countries like Haiti need new cities with different rules. And developed countries should be the ones that build them

On the first day of TEDGlobal, a conference for technology enthusiasts in Oxford in July 2009, a surprise guest was unveiled: Gordon Brown. He began his presentation with a striking photograph of a vulture watching over a starving Sudanese girl. The internet, he said, meant such shocking images circulated quickly around the world, helping to mobilise a new global community of aid donors. Brown’s talk ended with a call to action: developed countries should give more aid to fight poverty.

When disaster strikes—as in the recent Haiti earthquake—the prime minister is right. Even small amounts of aid can save many lives. The moral case for aid is compelling. But we must also remember that aid is just palliative care. It doesn’t treat the underlying problems. As leaders like Rwandan president Paul Kagame have noted, it can even make these problems worse if it saps the innovation, ambition, confidence, and aspiration that ultimately helps poor countries grow.

So, two days later, I opened my own TED talk with a different photo, one of African students doing their homework at night under streetlights. I hoped the image would provoke astonishment rather than guilt or pity—for how could it be that the 100-year-old technology for lighting homes was still not available for the students? I argued that the failure could be traced to weak or wrong rules. The right rules can harness self-interest and use it to reduce poverty. The wrong rules stifle this force or channel it in ways that harm society.

The deeper problem, widely recognised but seldom addressed, is how to free people from bad rules. I floated a provocative idea. Instead of focusing on poor nations and how to change their rules, we should focus on poor people and how they can move somewhere with better rules. One way to do this is with dozens, perhaps hundreds, of new “charter cities,” where developed countries frame the rules and hundreds of millions of poor families could become residents.

How would such a city work? Imagine that a government in a poor country set aside a piece of uninhabited land. It invites a developed country to enter into a new type of partnership, in which the developed country sets up and enforces rules specified in a charter. Citizens from the poorer country, and the rest of the world, would be free to live and work in the city that emerges. It could create economic opportunities and encourage foreign investment, and by using uninhabited land it would ensure everyone living there would have chosen to do so with full knowledge of the rules. Roughly 3bn people, mostly the working poor, will move to cities over the next few decades. To my mind the choice is not whether the world will urbanise, but where and under which rules. Instead of expanding the slums in existing urban centres, new charter cities could provide safe, low-income housing and jobs that the world will need to accommodate this shift. Even more important, these cities could give poor people a chance to choose the rules they want to live and work under.

To understand why rules are the way to harness self-interest, and why such new cities could work where old cities have not, look again at the example of electricity. We know from the developed world that it costs very little to light a home—on average, less than one US penny an hour for a 100-watt bulb. We also know that most poor people in Africa are not starving. They could afford some light. Africans do not lack electricity because they are too poor. Indeed, reliable power is so important for education, productivity and job creation that it would be more accurate to say that many in Africa are poor because they don’t have electricity. So why don’t they?

Why the right rules matter
Consider development the other way round. US customers have cheap electricity mostly because rules channel self-interest in the right way. Some protect investments made by utilities, others stop these companies abusing their monopoly power. With such rules, companies win; efficient providers make a profit. But customers win too; they get access to a vital resource at low cost. It’s the absence of these rules that explains why many Africans don’t have electricity at home. It might seem a simple insight, but it took economists a long time to understand it.

In the 1950s and 1960s, economic models treated ideas as public goods, meaning that once one existed it was assumed to exist everywhere. Some ideas are like this—for example, the formula for oral rehydration therapy, the mixture of sugar, salt, and water, that stops children dying from diarrhoea. No one owns it and you can find it easily online. If all ideas were like this it would be easier for poor countries to grow. But they aren’t: patents and other legal rules stop some ideas spreading, while others are just easy to keep secret.

When I started graduate school in the late 1970s I was convinced economists underestimated the potential for new ideas to raise living standards. The body of work that grew out of my PhD thesis came to be called new growth theory, or post-neoclassical endogenous growth theory in Britain (when it was infamously taken up by new Labour in the mid-1990s). Initially I just wanted to understand how good ideas, like those which make cheap electric light possible, were discovered. But then another topic began to interest me: why didn’t ideas common in some parts of the world spread to others?

Put simply, some countries are better able to establish the type of rules that help good ideas spread, while others are trapped by bad rules that keep ideas out. The rules stopping cheap electricity, for instance, are not hard to identify. The threat of expropriation or political instability stops many western electricity companies moving into Africa. Those that do set up there can exploit their power as monopolists to charge excessive prices. Often they offer bribes to stop rules being enforced, or pay bribes themselves. Good rules would stop all this. So to unleash the potential of the marketplace, poor countries need to find a way to create good rules.

The challenge in setting up good rules lies in solving what economists call “commitment” problems. How can a developing country promise to keep the rules that govern investment fair? Nobel prize-winning economist Thomas Schelling illustrates this problem with the example of a kidnapper who decides he wants to free his victim. But the kidnapper worries that the victim, once released, will go to the authorities. The victim, eager to be free, promises not to—but there is no way for him to guarantee he will keep quiet. As a result, the kidnapper is compelled to kill the victim, even though both would be better off if a binding agreement could be made. Poor countries face similar problems: their leaders cannot make credible commitments to would-be investors.

Rich nations use well-functioning systems of courts, police and jails, developed over centuries, to solve such problems. Two people can make a commitment. If they don’t follow through, the courts will punish them. But many developing countries are still working their way down the same arduous path. Their leaders can fight corruption and establish independent courts and better rules over property rights, but such moves often require unpopular measures to coerce and cajole populations, making internal reforms excruciatingly slow. Subsequent leaders may undo any commitments they make. A faster route would seem to be for a developed country to impose new rules by force, as they did in the colonial period. There is evidence that some former colonies are more successful today because of rules established during their occupations. Yet any economic benefits usually took a long time to show up, and rarely compensated for years of condescension and the violent opposition it provoked. Today, violent civil conflicts have led some countries to again consider military humanitarian intervention, but this can only be justified in extreme circumstances. My point was that there is a middle ground between slow internal reforms and risky attempts at recolonialisation: the charter city.

There are large swathes of uninhabited land on the coast of sub-Saharan Africa that are too dry for agriculture. But a city can develop in even the driest locations, supported if necessary by desalinated and recycled water. And the new zone created need not be ruled directly from the developed partner country—residents of the charter city can administer the rules specified by their partner as long as the developed country retains the final say. This is what happens today in Mauritius, where the British Privy Council is still the court of final appeal in a judicial system staffed by Mauritians. Different cities could start with charters that differ in many ways. The common element would be that all residents would be there by choice—a Gallup survey found that 700m people around the world would be willing to move permanently to another country that offers safety and economic opportunity.

I started thinking about city-scale special zones after writing a paper about Mauritius. At the time of its independence in 1968, economists were pessimistic about this small island nation’s prospects. The population was growing rapidly, new jobs were scarce in its only real export industry (sugar), and high tariffs designed to protect small companies manufacturing for the domestic market meant no companies could profitably use their workers to manufacture goods for export. It was politically impossible to dismantle these barriers to trade, so policymakers did the next best thing: they created a special category of companies, ones said to be in a “special export zone.” The zone didn’t physically exist, in that these companies could locate anywhere on the island, but companies “inside” the zone operated under different rules. They faced no tariffs, or limits on imports or exports. Foreign companies in the zone could enter and exit freely, and keep profits they earned. Domestic companies could enter too. The only quid pro quo was that everyone in the zone had to produce only for export, so as not to compete with domestic firms. The zone was a dramatic success. Foreign businesses entered. Employment grew rapidly. The economy moved from agriculture to manufacturing. Once growth was underway, the government reduced trade barriers, freeing up the rest of the economy.

The history of development is littered with failed examples of similar zones. Mauritius was unusual because it had low levels of crime and the government already provided good utilities and infrastructure. The zone only had to remove one bad form of governance: trade restrictions. Yet many developing countries still can’t offer the basics, another reason why building new cities is an attractive option. Cities are just the right scale to offer basic conditions. So long as they can trade freely, even small cities are big enough to be self-sufficient. Yet because they are dense they require very little land.

To apply the lessons from Mauritius in countries with pervasive problems, the key is to create zones with new rules that are big enough to be self-contained. Big enough, that is, to hold a city. Then let people decide whether to enter.

When I returned to Mauritius in 2008, I outlined my ideas to Maurice Lam, head of the Mauritian Board of Investment. Maurice splits his time between Mauritius and Singapore. He and I knew that Lee Kuan Yew, former prime minister of Singapore, had experimented in the 1990s with a similar idea, establishing new cities that Singapore could help to run in China and Indonesia. These ran into difficulties because the local governments retained discretionary powers that they used to interfere after Singapore had made large investments in infrastructure. This convinced us that explicit treaties reassigning administrative control over land were needed. Maurice also said that countries in Africa would be open to this kind of arrangement. Some officials, eager to make a credible commitment to foreign investors, had already made informal inquiries about whether Mauritius would be willing to take administrative control over their special export zones.

What could go wrong?
Some economists have objected that a charter agreement between two countries will not necessarily solve the commitment problem that lies at the heart of development failures. The leaders of many countries enter into agreements, sometimes with the best intentions, that subsequent leaders or officials do not honour—as Lee Kuan Yew found to his cost. To guard against such an outcome, partners in a charter city must negotiate a formal treaty, like the one that gave the British rights in Hong Kong (see box, right). Under this arrangement the only way for the host country to renege on its commitment would be to invade. Even governments that resent having signed such agreements in the past almost always respect them. The Cubans hate the agreement that gave the US control of Guantánamo Bay, but learned to live with it.

Another objection comes from those who study urbanisation. They point out that the location of most existing cities is determined by accidents of history or geography, and suggest, correctly, that there are geographical requirements for a city to survive. But they are surely wrong to think that all the good sites for cities are taken. Here distance matters, but it is not an insurmountable obstacle: Mauritius continues to develop despite its remote location. Flat land is cheaper to build on, but many cities have developed on hilly terrain. A river can provide fresh water and access to the sea, but with desalination, so too can any coastal location where a port could be built. Access to the sea is the only real necessity—as long as a charter city can ship goods back and forth on container ships, it can thrive even if its neighbours turn hostile or unstable. And there are thousands of largely uninhabited coastal locations on several continents that could qualify.

Other urban economists fear new cities will repeat the unimpressive history of government-planned ones like Brasília, or Dubai’s recent bust. But these are both extreme examples. The state was too intrusive in Brasília and almost non-existent in Dubai. Hong Kong is the middle ground, a state ruled by laws not men, but one that leaves competition and individual initiative to decide the details.

The experience in Hong Kong offers two further lessons. The first is the importance of giving people a choice about the rules that govern them. Hong Kong was sparsely populated when the British took over. Unlike other colonial systems, almost everyone chose to come and live under the new system. This gave the rules proposed by the British a degree of legitimacy they never had in India, where the rules were imposed on often unwilling subjects. This is why building new cities, rather than taking over existing ones, is so powerful.

The second lesson is the importance of getting the scale right. Most nations are too large to update all their rules and laws at once. The coercion needed to impose a new system on an existing population generates friction, no matter who is in charge. Leaders on mainland China understood this when they attempted to copy the successes of Hong Kong by gradually opening a few places, such as the new city of Shenzhen, near Hong Kong. Yet while nations are too big, towns and villages are too small. A village cannot capture the benefits that arise when millions of people live and work together under good rules. Cities offer the right scale for dramatic change.

The demands of migration
As billions of people urbanise in the coming decades, they can move to hundreds of new cities. The gains new cities can unleash are clear. Picture again the students studying under the streetlights. By themselves, political leaders in poor countries won’t provide cheap, reliable electricity any time soon. They can’t eliminate the political risk that holds back investment or ensure adequate regulatory controls. But working with a partner nation, they can establish a new city where millions of young people could pay pennies to be able to study at home. And as these cities seek out residents, the leaders and citizens in existing countries will face the most effective pressure for good governance—competition.

We know from history that the competitive pressures created by migration can boost economic growth. But strong opposition to immigration in the world’s richest economies prevents many people from moving to better systems of rules. Charter cities bring the good systems of rules to places that would welcome migrants. Indeed, charter cities offer the only viable path for substantial increases in global migration, bringing good rules to places that the world’s poor can easily and legally access, while lessening the contentious political frictions that arise from traditional migration flows.

Intelligently designed new cities can offer environmental benefits too, a point increasingly made by environmentalists like Stewart Brand (see p39.) For example, Indonesia emits greenhouse gases at a rate exceeded only by China and the US. This rate is partly due to logging practices in its rainforest, and efforts to clear land for palm-oil plantations and pulp-producing acacia trees. Brand has cited the experience of Panama to demonstrate the green potential of urbanisation: as people there left slash-and-burn agriculture for work in cities, forest regenerated on the land they left behind. Similar migration to new cities in places like Indonesia could do much to reduce carbon emissions from the developing world.

Investment in charter cities could also make more effective the aid rich countries give. The British experience in Hong Kong shows that enforcing rules costs partners very little, but can have a huge effect. Because Hong Kong helped make reform in the rest of China possible, the British intervention there arguably did more to reduce world poverty than all the official aid programmes of the 20th century, and at a fraction of the cost. And, if many such cities are built, fewer people will be trapped in the failed states that are the root cause of most humanitarian crises and security concerns.

There are many questions to be resolved before the first city is chartered. Is it better to have a group of rich nations, or a multinational body like the EU, play the role the British played in Hong Kong? How would such a city be governed? And how and when might transfer of control back to the host country be arranged? But as we begin to explore these questions, we must not lose sight of the fundamental insights that advocates of the free market underestimate. The win-win agreements that we see in well-functioning markets are possible only when there is a strong, credible government that can establish the rules. In places where these rules are not present, it could take centuries for locals to bootstrap themselves from bad rules to good. By creating new zones through partnerships at the national level, good rules can spread more quickly, and when they do, the benefits can be huge.

The world’s fortunate citizens must be able to provide assistance when disasters like the earthquake in Haiti strike, but we must also be wary of the practical and moral limits of aid. When the roles of benefactor and supplicant are institutionalised, both parties are diminished. In the case of Haiti, if nations in the region created just two charter cities, they could house the entire population of that country. Senegal has offered Haitians the opportunity to return to the home “of their ancestors.” “If they come en masse we are ready to give them a region,” a Senegal government spokesman said. Outside of the extraordinary circumstances of a crisis, the role of partner is better for everyone. And there are millions of people seeking partnerships around the world. Helping people build them successfully is the opportunity of the century

Hong Kong: the first charter city?
Hong Kong was a successful example of a special zone that could serve as a model for charter cities. In the 1950s and 1960s, it was the only place in China where Chinese workers could enter partnerships with foreign workers and companies. Many of the Chinese who moved to Hong Kong started in low-skill jobs, making toys or sewing shirts. But over time their wages grew along with the skills that they gained working with educated managers, and using modern technologies and working practices.

Over time they acquired the values and norms that sustain modern cities. As a result, Hong Kong enjoyed rapid economic growth—in 1960, the average income was around £2,500; by 1997, it was around £20,000. Even if it had wanted to, the Chinese government acting alone could not have offered this opportunity. The credibility of rules developed over centuries by the British government was essential in attracting the foreign investment, companies and skilled workers that let these low-skill immigrants lift themselves out of poverty. As in Mauritius, authority rested ultimately with the British governor general, but most of the police and civil servants were Chinese. And the benefits demonstrated in Hong Kong became a model for reform-minded leaders in China itself.

ADOPT-a-CITY
http://video.forbes.com/fvn/21-century-cities-09/adopt-a-city
http://www.theatlantic.com/magazine/print/2010/07/the-politically-incorrect-guide-to-ending-poverty/8134/
The Politically Incorrect Guide to Ending Poverty
by Sebastian Mallaby / July/August 2010

Halfway through the 12th Century, and a long time before economists began pondering how to turn poor places into rich ones, the Germanic prince Henry the Lion set out to create a merchant’s mecca on the lawless Baltic coast. It was an ambitious project, a bit like trying to build a new Chicago in modern Congo or Iraq. Northern Germany was plagued by what today’s development gurus might delicately call a “bad-governance equilibrium,” its townships frequently sacked by Slavic marauders such as the formidable pirate Niclot the Obotrite. But Henry was not a mouse. He seized control of a fledgling town called Lübeck, had Niclot beheaded on the battlefield, and arranged for Lübeck to become the seat of a diocese. A grand rectangular market was laid out at the center of the town; all that was missing was the merchants.

To attract that missing ingredient to his city, Henry hit on an idea that has enjoyed a sort of comeback lately. He devised a charter for Lübeck, a set of “most honorable civic rights,” calculating that a city with light regulation and fair laws would attract investment easily. The stultifying feudal hierarchy was cast aside; an autonomous council of local burgesses would govern Lübeck. Onerous taxes and trade restrictions were ruled out; merchants who settled in Lübeck would be exempt from duties and customs throughout Henry the Lion’s lands, which stretched south as far as Bavaria. The residents of Lübeck were promised fair treatment before the law and an independent mint that would shelter them from confiscatory inflation. With this bill of rights in place, Henry dispatched messengers to Russia, Denmark, Norway, and Sweden. Merchants who liked the sound of his charter were invited to migrate to Lübeck.

The plan worked. Immigrants soon began arriving in force, and Lübeck became the leading entrepôt for the budding Baltic Sea trade route, which eventually extended as far west as London and Bruges and as far east as Novgorod, in Russia. Hundreds of oaken cogs—ships powered by a single square sail—entered Lübeck’s harbor every year, their hulls bursting with Flemish cloth, Russian fur, and German salt. In less than a century, Lübeck went from a backwater to the most populous and prosperous town in northern Europe. “In medieval urban history there is hardly another example of a success so sudden and so brilliant,” writes the historian Philippe Dollinger.

Perhaps the only thing more remarkable than Lübeck’s wealth was the influence of its charter. As trade routes lengthened, new cities mushroomed all along the Baltic shore, and rather than develop a legal code from scratch, the next wave of city fathers copied Lübeck’s charter, importing its political and economic liberties. The early imitators included the nearby cities of Rostock and Danzig, but the charter was eventually adopted as far afield as Riga and Tallinn, the capitals of modern Latvia and Estonia. The medieval world had stumbled upon a formula for creating order out of chaos and prosperity amid backwardness. Lübeck ultimately became the seat of the Hanseatic League, an economic alliance of 200 cities that lasted nearly half a millennium.

Fast-forward several centuries, and Henry the Lion’s would-be heir is Paul Romer, a gentle economist at Stanford University. Elegant, bespectacled, geekishly curious in a boyish way, Romer is not the kind of person you might picture armed with a two-handed flanged mace, cutting down Slavic marauders. But he is bent on cutting down an adversary almost as resistant: the conventional approach to development in poor countries. Rather than betting that aid dollars can beat poverty, Romer is peddling a radical vision: that dysfunctional nations can kick-start their own development by creating new cities with new rules—Lübeck-style centers of progress that Romer calls “charter cities.” By building urban oases of technocratic sanity, struggling nations could attract investment and jobs; private capital would flood in and foreign aid would not be needed. And since Henry the Lion is not on hand to establish these new cities, Romer looks to the chief source of legitimate coercion that exists today—the governments that preside over the world’s more successful countries. To launch new charter cities, he says, poor countries should lease chunks of territory to enlightened foreign powers, which would take charge as though presiding over some imperial protectorate. Romer’s prescription is not merely neo-medieval, in other words. It is also neo-colonial.

Inevitably, Romer’s big idea attracts some skeptical responses. “Paul is very creative,” says William Easterly, a development economist at New York University, “and sometimes creativity can cross the line into craziness.” The way Easterly sees it, charter cities (like charter schools in American cities) may provide an alternative to incumbent government systems, promising experimentation, competition, and perhaps a new way forward. But Easterly also worries that Romer has fallen prey to an old siren song—the idea that you can slough off debilitating customs and vested interests by constructing a technocratic petri dish uncontaminated by politics. Other critics are blunter. “Romer makes it sound as though setting up a charter city is like setting up a fairground,” Elliott Sclar, a professor of urban planning at Columbia University, told me. “We take a clear piece of land, we turn on the bright lights, and we create this separate environment that will stand apart from everything that’s around it. I wish it were that simple.”

However simple-seeming his ideas, Romer is no lightweight. Starting in the late 1980s, he produced a series of papers that changed the way his profession thinks about economic growth; his most celebrated contribution, published in 1990, “was one of the best papers in economics in 25 or 30 years,” in the estimation of Charles I. Jones, a colleague of Romer’s at Stanford. Before the Romer revolution, theorists had explained an economy’s growing output by looking at the obvious inputs—the number of hours worked, the skills of the workforce, the quantity of machinery and other physical capital.

But Romer stressed a fourth driver of growth, which he termed simply “ideas,” a category that encompassed everything from the formula for a new drug to the most efficient sequence for stitching 19 pieces of material into a sneaker. In statistical tests, the traditional inputs appeared to account for only half the differences in countries’ output per person, suggesting that ideas might account for the remaining half—and that leaving them out of a growth theory was like leaving the prince out of Hamlet. And whereas the old models had predicted that growth would slow as population expansion put stress on resources, and as new investment in skills and capital yielded diminishing returns, Romer’s New Growth Theory opened the window onto a sunnier worldview: a larger number of affluent people means more ideas, so prosperity and population expansion might cause growth to speed up.

Romer’s enthusiasm for technology made him a natural West Coaster, so it is not surprising that, after spells on the faculty at the University of Rochester and the University of Chicago, he fetched up at the University of California at Berkeley and then at Stanford’s Graduate School of Business. But the next turn in his thinking involved a rebellion against the libertarianism of his Silicon Valley home. “I was willing to be a bit confrontational,” Romer says, impishly. Starting with a paper he presented at a World Bank conference in 1992, Romer began to emphasize that “ideas” included more than just technologies and manufacturing processes. Ideas were also embodied in customs and institutions—or, as Romer later came to put it, “rules”—patent law, competition law, bankruptcy law, and so on, as well as the softer “norms” that govern people’s behavior. Indeed, these rules could be even more important than technologies, however much the digerati of Silicon Valley might wish to believe otherwise. Without new technologies, an economy might grow slowly. But without decent rules, an economy cannot even make use of the technologies that already exist.

To drive home the importance of good rules to economic growth, Romer sometimes shows a photograph of Guinean teenagers doing their homework under streetlights. The line of hunched, concentrating figures presents a mystery, Romer says; from the photo it is clear that the teens are not dirt poor, and youths like these generally own cell phones. Yet they evidently have no electric light at home, or they would not be studying by the curbside. “So here is the puzzle,” Romer declares: Why do these kids have access to a cutting-edge technology like the cell phone, but not to a 100-year-old technology for generating electric light in the home? The answer, in a word, is rules. Because of misguided price controls in the teenagers’ country, the local electricity utility has no incentive to connect their houses to the power grid. Their society lacks the rules that make technological advance meaningful.

For much of the 1990s, development economists built on Romer’s insights, so that laws and the institutions needed to enforce them became central to the mainstream view of what drives human progress. But then, having transformed academic economics, Romer shocked the profession once again—this time by abandoning it. Starting in 2001, he began to channel his energy into a start-up software company that he named Aplia. “I was extremely disappointed to lose Paul as an academic colleague,” Easterly told me. “By walking away from research, he no doubt ignored the advice of anyone he might have talked to.” But Romer shrugged off such complaints. “When I was young, there were too many old economists who were getting in the way,” he explained. “So after 10 years I wanted to get out of the way, and not stifle the next generation.” Besides, Romer’s father, Roy, a former governor of Colorado, had just begun running the Los Angeles school system. As a proponent of technology, the younger Romer was embarrassed that educators such as himself had barely used computers to boost their own productivity.

Like Romer’s research, his company was radical. It created teaching materials that could be accessed online by collegiate economics students, challenging the dead-tree model of the textbook-industrial complex. At first, Romer was told that his approach was crazy. Students were used to paying a fortune for textbooks and then getting the accompanying homework problems at a trivial cost; Romer’s little start-up presumed to invert custom. Sooner or later, Romer insisted, textbooks would be electronic, at which point they would be copied and shared. By contrast, access to online homework problems could be metered successfully on the Web, because the sale of the homework could be bundled with automatic, online grading. Professors would be drawn to the system, and to assigning Aplia’s online texts. And those who had stinted on handing out exercises because of the grading time required would now feel free to assign more, with the result that students would make faster progress. By the time Romer sold Aplia in 2007, students had submitted 200 million answers to its online problems, and the venture had made its founder independently wealthy—not rich enough to be invited to Silicon Valley’s fancy charity galas, but plenty rich enough to live without a salary. At 52 years old, he began to look for a new challenge.

Romer was not inclined to go back to academia. The World Bank sounded him out for the job of chief economist, a perch previously occupied by stars such as Stanley Fischer, Lawrence Summers, and Joseph Stiglitz, but Romer was not interested in that, either. What he wanted, he told me, was to draw on the intellectual creativity of his university days and the entrepreneurial initiative he had shown at Aplia—and above all, to be maximally ambitious. When he made his choice, in 2008, it was suitably bold. He gave up tenure at Stanford and set out to make his mark in his own way: with the help of three assistants, he launched his charter-cities campaign, operating partly out of the small office he retained at Stanford and partly out of a friend’s house or a local Peet’s Coffee. He also began to shuttle back and forth across the world, meeting with any developing-country leader who would grant him an audience. Especially in sub-Saharan Africa, a surprising number proved ready to do so.

When Romer explains charter cities, he likes to invoke Hong Kong. For much of the 20th century, Hong Kong’s economy left mainland China’s in the dust, proving that enlightened rules can make a world of difference. By an accident of history, Hong Kong essentially had its own charter—a set of laws and institutions imposed by its British colonial overseers—and the charter served as a magnet for go-getters. At a time when much of East Asia was ruled by nationalist or Communist strongmen, Hong Kong’s colonial authorities put in place low taxes, minimal regulation, and legal protections for property rights and contracts; between 1913 and 1980, the city’s inflation-adjusted output per person jumped more than eightfold, making the average Hong Kong resident 10 times as rich as the average mainland Chinese, and about four-fifths as rich as the average Briton. Then, beginning around 1980, Hong Kong’s example inspired the mainland’s rulers to create copycat enclaves. Starting in Shenzhen City, adjacent to Hong Kong, and then curling west and north around the Pacific shore, China created a series of special economic zones that followed Hong Kong’s model. Pretty soon, one of history’s greatest export booms was under way, and between 1987 and 1998, an estimated 100 million Chinese rose above the $1-a-day income that defines abject poverty. The success of the special economic zones eventually drove China’s rulers to embrace the export-driven, pro-business model for the whole country. “In a sense, Britain inadvertently, through its actions in Hong Kong, did more to reduce world poverty than all the aid programs that we’ve undertaken in the last century,” Romer observes drily.

Of course, versions of China’s special economic zones have existed elsewhere, especially in Asia. But Romer is not just arguing for enclaves; he is arguing for enclaves that are run by foreign governments. To Romer, the fact that Hong Kong was a colonial experiment, imposed upon a humiliated China by means of a treaty signed aboard a British warship, is not just an embarrassing detail. On the contrary, British rule was central to the city’s success in persuading capitalists of all stripes to flock to it. Romer sometimes illustrates this point by citing another Communist country: modern-day Cuba. Cuba’s rulers have tried to induce foreign corporations to set up shop in special export zones, and have been greeted with understandable caution. But if Raúl Castro convinced a foreign government—ideally a rich democracy such as Canada—to assume sovereignty over a start-up city in Cuba, the prospect of a mini Canada in the sun might attract a flood of investment.

It must have occurred to Castro, Romer says, that his island could do with its own version of Hong Kong; and perhaps that the Guantánamo Bay zone, over which Cuba has already ceded sovereignty to the United States, would be a good place to build one. “Castro goes to the prime minister of Canada and says, ‘Look, the Yankees have a terrible PR problem. They want to get out. Why don’t you, Canada, take over? Run a special administrative zone. Allow a new city to be built up there,’” Romer muses, channeling a statesmanlike version of Raúl Castro that Cuba-watchers might not recognize. “Some of my citizens will move into that city,” Romer-as-Castro continues. “Others will hold back. But this will be the gateway that will connect the modern economy and the modern world to my country.”

When I put this scenario to Julia Sweig, a Cuba expert at the Council on Foreign Relations, she described the whole notion as “wacky.” But not everyone has dismissed Romer’s vision so quickly. Romer maintains that when he started to discuss his thinking with governments in developing countries, he found many of them receptive. One nation in particular seemed eager to sign on: the island-state of Madagascar, off the southeastern coast of Africa, where 90 percent of the people subsist on less than $2 a day.

In July 2008, Romer made his first trip to Madagascar’s bustling capital, Antananarivo. Madagascar’s government was anxious to attract foreign investment, and it understood that a credibility deficit held it back. In an earlier bout of openness, the island had lured in foreign garment firms, but then the political climate turned hostile and the firms fled; now the government was having trouble enticing them to come back. Faced with this obstacle, the Malagasy authorities were open to unconventional arrangements. To boost investment in agriculture, they were ready to lease a Connecticut-size tract of land to Daewoo, a South Korean corporation, for 99 years. To boost investment in export industries, they were thinking about inviting a tiny Indian Ocean neighbor, Mauritius, to administer an export-processing zone on Malagasy territory. Romer’s proposal fit in with these adventurous ideas. He returned to Antananarivo in November 2008 and held another round of promising meetings with government officials. The final hurdle, he was told, would be to secure an audience with the president, a former businessman named Marc Ravalomanana. Nothing could happen without his say-so.

Romer returned to Stanford and waited to hear when the president might be available. Periodically, he would receive an e-mail: Ravalomanana’s schedulers were battling to fit him in, but dozens of competing issues demanded the boss’s attention, and they were reluctant to commit to a firm time for the meeting. As the end of the year approached, without any appointment, Romer decided it was time for a gamble: he made the 30-hour trip from San Francisco once again, arriving in Antananarivo on the Sunday before Christmas, figuring that the president’s schedule might open up over the holidays. He checked himself into the Hotel du Louvre, close to the presidential palace, and called his government contacts to announce his arrival; then he set about waiting. He found that a patisserie nearby served finer French pastries than he had tasted in any American city. Sitting in the café with an espresso and a mille-feuille, Romer could see young men, stunted from malnutrition, watching over the cars parked in front of the hotel, hoping for a few tips. A portly European of a certain age walked by with an attractive young Malagasy woman on his arm, and the men outside the hotel stared. The look on their faces expressed all that needed to be said about global inequality.

Two days after he arrived, Romer got the summons he was waiting for. Late in the evening, on the night before Christmas Eve, he was ushered into the president’s personal residence, a recently refurbished but relatively modest home high in the hills. Ravalomanana had a few guests over to celebrate the holidays, and the mood was relaxed. He invited Romer out onto his balcony to see the view of the city, and then the two men moved into a study. The only symbols of authority were a large desk and a flag. The president was in shirtsleeves.

In public, Ravalomanana cut quite a figure. Handsome, youthful in appearance, and wealthy, he had started out selling homemade yogurt off the back of a bicycle and ended up holding a national monopoly on all dairy and oil products. But in private, Romer found the president quite approachable. Romer made his pitch for a charter city, and Ravalomanana responded that he wasn’t sure one was enough; if Romer could identify two rich countries willing to play the role of government trustee, it might be better to launch two parallel experiments. The president and the professor agreed that the new hubs should be open to migrants from nearby countries as well as to locals. They rose to examine a map of Madagascar on the study wall. Ravalomanana suggested building the first city on the island’s southwestern coast, which was largely uninhabited because of its dry heat. To Romer, the site sounded very much like the coastal locations that appeal most to the world’s affluent as vacation spots.

Romer has a quick smile and a knack for saying big things with small words, but he is not much for emotion. Recalling his trips to Madagascar, he sounds typically cool about them. But a more excitable person would be whooping out the punch lines at this point in the story; the fact that the charter-cities movement had progressed so far so fast is little short of astonishing. Barely a year after launching his venture, Romer was on the brink of a rare coup: a nation of 20 million people was about to embrace a neo-medieval, neo-colonial scheme untested in the modern history of development. But then a different sort of coup occurred—the kind of coup, unfortunately, that underscores the obstacles to Romer’s project.

Even as Romer was meeting with Ravalomanana, the president’s main political opponent was sniping at the proposed lease of farmland to Daewoo, and the idea of giving up vast swaths of territory to foreigners was growing increasingly unpopular. The arrangement was denounced as treason, and public protests gathered momentum, eventually turning violent. In late January 2009, protesters tossed homemade grenades at radio and TV stations that Ravalomanana owned; looters ransacked his chain of supermarkets. In February, guards opened fire on marchers in front of the presidential palace, killing 28 civilians. At this, units of the army mutinied. Soon, Ravalomanana was forced out of office.

The first action of the new government was to cancel the Daewoo project, and Romer’s plans in Madagascar were put on hold indefinitely. But the larger question was what, if anything, this disappointment signified for Romer’s whole approach. The riots appeared to demonstrate the explosive sensitivities surrounding sovereignty and land—sensitivities that are not confined to Madagascar. Indeed, versions of the Daewoo story have played out elsewhere. In the late 1990s, for example, Fiji’s government decided to bring in a British nonprofit to manage its mahogany forests, and an indigenous leader launched a revolt under the slogan “Fiji for the Fijians.” The rebellion was hypocritical: as the Oxford economist Paul Collier recounts in his book The Bottom Billion, the indigenous leader had himself backed a rival foreign bid to manage the mahogany. But the venality of the rebels’ motivation didn’t change the fact that a demagogue could easily attract support by railing against territorial concessions to foreigners.

Ever since the setback in Madagascar, Romer has been coy, for obvious reasons, about which governments are interested in his plan. But he remains optimistic. “I revived growth theory. I made technology work in higher ed. I am two for two, and I think the impossible can be done,” he told me cheerfully. He added that the Daewoo deal might not have been the main impetus for the coup in Madagascar; the real reasons for Ravalomanana’s downfall lay in idiosyncratic local rivalries, even if the opposition exploited sensitivities over land to incite antigovernment protests. I suggested that the fact that land concessions could trigger such emotions was still not a good sign. Romer stopped, considered, and chose his words carefully.

“Anything that involves land can be manipulated by people who want to rise up against a leader,” he began. “You have to find a place where there’s a strong enough leader with enough legitimacy to do this knowing that he’s going to get attacked. It narrows the options quite a bit. But we shouldn’t give up without trying a few more places.” In short, a disappointment with one client is no excuse for failing to pitch other ones. Any entrepreneur knows that.

As politically freighted as Romer’s ideas are, they also carry a continuing attraction to the people in charge of many poor countries, particularly those with rapidly growing populations. By some estimates, 3 billion people will move to cities in the next few decades, abandoning miserable and environmentally destructive work as subsistence farmers in the hope of better lives in manufacturing and services. In the absence of a Romer-type solution, these migrants will move into urban slums with no running water, high crime rates, few steady jobs, and sewage in the streets; charter cities seem a better option. And Romer’s idea has the great merit of paying for itself. Land in successful cities appreciates in value, creating wealth that can be unlocked to finance new buildings, businesses, and infrastructure. And so African officials continue to meet with Romer, and Romer continues to jet off to wherever they are ready to see him.

When you listen carefully, you realize that much of what Romer is saying should not be controversial. A few development economists argue that geography is destiny, but most share Romer’s conviction that decent rules are paramount. After all, Asia accounted for fully 56 percent of world income in 1820, only 16 percent in 1950, and a substantial 39 percent in 2008; what changed over this period was rules, not geography. Equally, Romer’s contention that a developing country can achieve good government by importing the credibility of foreigners fits with mainstream thinking. When Panama or Ecuador decides to do business in dollars, or when Slovenia embraces the euro, each country is importing the credibility of a foreign central bank. Similarly, joining the World Trade Organization is a proven way to import the rich world’s tariff structure, intellectual-property rules, and domestic regulations—and, just as important, to persuade investors that the reform is permanent. Importing foreign election monitors or peacekeepers can compensate for weak political institutions or security forces. And so on.

But Romer is also urging us to reexamine assumptions about citizenship and democracy, and this is where he gets more radical. In the kind of charter city he imagines, the governor would be appointed by Canada or some other rich nation, but the people who work there would come from poor countries—the whole point, after all, is to bring the governance of the developed world to workers in undeveloped places. It follows that the workers in Romer’s charter city wouldn’t be citizens in the full sense. They would be offered whatever protections the founding charter might lay down, and they would have to take them or leave them. Rather than getting a vote at the ballot box, Romer is saying, the residents of a charter city would have to vote with their feet. Their leaders would be accountable—but only to the rich voters in the country that appointed them.

This viewpoint is, to say the least, not in keeping with the idealized vision of development, in which freedom and prosperity advance in lockstep, with democracy serving as the necessary companion to economic progress. In the 1980s Ronald Reagan declared confidently, “Freedom works”; and in the 1990s Bill Clinton lectured foreign counterparts on how democracy had become all the more indispensable to progress with the advent of the “knowledge economy.” But assertions like these have seemed more fragile recently, with authoritarian China breaking growth records and state capitalism apparently thriving; Romer is hardly the only person to doubt that democracy is a necessary condition for economic progress. And to the extent that opt-in charter cities offer a third way—something between pure democracy and pure authoritarianism—those who care for liberty might do well to embrace the experiment. Charter cities make it harder for authoritarians to claim that their system offers the only fast route out of poverty.

The real test for Romer’s attitude toward democracy is not whether it conforms to Western ideals, but whether it appeals to the poor people whom Western aid agencies claim to be serving. And on this score, the answer is clear. In fact, you could say Romer’s assertion—that voting with your feet can be a palatable alternative to casting a ballot—already has 214 million adherents, for that is the number of people who have chosen to leave their home countries and settle as migrants in places where they have no political vote. Real development, as distinct from the idealized vision of development, involves hard personal choices. If people are willing to live as legal or illegal immigrants, with rights that range from limited to none, then logically, they should be even more eager to move to a Romerplex, which would promise most of the economic gains of uprooting to another continent while allowing migrants to stay closer to their families and cultures.

If you have stuck with Romer thus far, you are ready for the last part of his argument. If good rules are the key to development, it follows that the big development challenge is to grasp how to reform bad rules—and to accept that conventional approaches are not terribly successful. Think back to the African teenagers reading under the streetlights. The bad rules they contend with are well understood: dozens of World Bank missions have doubtless pointed out that price controls on electricity destroy the electric company’s incentive to sign up new customers. But what is not understood is how to abolish those controls, since the country’s elite, which is already hooked up to the electric grid, will fight tooth and nail against higher prices.

The standard response to this obstacle is to advocate democracy and hope that voters will force change: the minority that has electric light will be outvoted by the much larger number of people who have been denied it. But Romer argues that this way forward is too slow. People don’t always vote their economic interests, and elites with tentacles all over the ministry of energy may keep price controls in place for decades. So rather than wait in vain for electricity rules to change, we are better off starting a new experiment with brand-new rules—a charter city that stands outside the ministry’s authority. Rather than going at an obstacle head-on, Romer is saying, sidestepping it is frequently a better option.

Romer likes to clinch this point with an analogy from industry. A firm like IBM may develop a culture—a set of corporate rules—that is brilliantly suited to handling the institutional customers that buy mainframe computers. But when the PC is invented, and individuals become customers, the IBM culture proves awkward and slow; and reforming its rules turns out to be difficult. So along come Dell and Apple, with business models better targeted at household consumers, and pretty soon computer-users start preferring their products. Change from without comes more easily than change from within. Industrial progress comes from new entrants and new experiments, not from the slow process of changing established corporate bureaucracies.

Sometimes, Romer continues, established businesses subject themselves to an internal version of this process. They spawn experimental subsidiaries, known as “skunkworks,” to try out new business models. For example, the discount retailer Target began as an experimental skunkworks spun off by the old-line retailer Dayton Company. Target was given its own charter and allowed to test out a new approach; it succeeded so resoundingly that Dayton eventually ditched the parts of its business that ran according to the old rules and embraced the Target formula. Again, generating change within an organization is often less effective than driving change from without. If companies can change themselves by setting up subsidiaries with new rules, countries could do the same with charter cities.

Throughout our conversation, Romer maintained a steady confidence that poor countries will eventually welcome charter cities. At the end of one of his overseas trips, he messaged me from his iPhone: “Sadly can’t say more yet other than that in two cases I’m waiting for next step meeting w the president. As before I remain optimistic about response from developing countries.” In one case, Romer and his government counterparts have progressed quite far: they have identified the site for the charter city, and agreed that its success will require the construction of a new port. Meanwhile, Romer is equally confident that elite opinion will come around to his idea—and my own recent straw poll of development economists suggests that at least some of them have already done so.

But the largest obstacle Romer faces, by his own admission, still remains: he has to find countries willing to play the role of Britain in Hong Kong. Despite the good arguments that Romer makes for his vision, the responsibilities entailed in Empire 2.0 are not popular. How would a rich government contend with the shantytowns that might spring up around the borders of a charter city? Would it deport the inhabitants, and be accused of human-rights abuses? Or tolerate them and allow its oasis to be overrun with people who don’t respect its city charter? And what would the foreign trustee do if its host tried to nullify the lease? Would it defend its development experiment with an expeditionary army, as Margaret Thatcher defended the Falklands? A top official at one of Europe’s aid agencies told me, “Since we are responsible for our remaining overseas territories, I can tell you there is much grief in running these things. I would be surprised if Romer gets any takers.”

Sensing the resistance among potential trustee nations, Romer has come up with new variants on his formula. A group of advanced countries could share the burden of trusteeship, rather than one nation shouldering the responsibility alone. To reduce the sensitivities over land and sovereignty, the territory for a charter city could be provided by one country while the migrant workers come from another. When I asked Romer about setting up a charter city in post-earthquake Haiti, he recoiled at the idea: the country has no functioning government, so there is no entity that could transfer sovereignty over a parcel of territory in a legitimate way. But Romer was happy to contemplate creative variations on this theme. What if Mexico ceded some land for a charter city for Haitians, with the charter being administered by a consortium of outside governments?

Whatever becomes of Romer’s movement, it is going to be interesting. His thinking taps into so many currents of our era—an era in which millions of migrants embrace his vote-with-your feet vision; in which the old faith in democratic development is questioned; and in which globalization scrambles settled notions of who rules what where. On one side, critics will be scathing: Elliott Sclar, the Columbia professor, warns, “Charter cities amount to a new form of colonialism, and that’s the last thing we need right now.” On the other side, adherents will cheer eagerly: charter cities are “one of the best ideas that anybody in development ever had,” according to Michael Clemens of the Center for Global Development, a think tank in Washington, D.C. And throughout these debates, it will be hard not to sympathize with Romer’s plea for fresh thinking. Charter cities face plenty of obstacles, and I could have written an article that dwelt exclusively on them. But when African teenagers do their homework under streetlights, isn’t Romer right to think the unthinkable?

HAVE GOOD RULES
http://freakonomics.blogs.nytimes.com/2009/09/29/can-charter-cities-change-the-world-a-qa-with-paul-romer/
Can “Charter Cities” Change the World? A Q&A With Paul Romer
by Dwyer Gunn / September 29, 2009

Weak institutions and bad rules are some of the most significant obstacles to economic growth in developing countries. Paul Romer, an economist known for his work on economic growth, has a plan to change that and recently resigned his tenured teaching position at Stanford to devote his full energies to the challenge. “Moving from bad rules to better ones may be much harder than most economists have allowed.” Romer’s plan calls for the establishment of Hong Kong-like “charter cities,” special zones within developing countries with better rules and institutions. Romer agreed to answer some of our questions about his crazy and/or revolutionary plan below:

Q. You recently gave up your tenured teaching position at Stanford to launch an ambitious development initiative. Can you tell us about your new charter cities project?
A. Yes, instead of being a professor, I’m now a senior fellow there, which means exactly what it says: I’m officially an old guy. The key to the project is a charter city, which starts out as a city-sized piece of uninhabited territory and a charter or constitution specifying the rules that will apply there. If the charter specifies good rules (or in our professional jargon, good institutions) millions of people will come together to build a new city.

Q. What makes you confident that land and a good charter are all it takes?
A. A well-run city lets millions of people come together and enjoy the benefit they can get from working together and trading with each other. The benefits per person increase with the total number of people; this is why big cities are more productive than small cities or villages. Of course, none of this is new. Adam Smith was referring to the power of exchange and the importance of increasing returns when he wrote that, “the division of labor is limited by the extent of the market.” There are many signs of the value created by all the exchange that takes place in a city. We see it in productivity and wage data. We also see it in the increase in the value of the land. Millions of people are willing to pay high rents just to live and work around millions of other people who are also paying high rents. Why? To get the benefits that come from exchange and interaction with so many others. In the developing world, most people don’t yet live in big well-run cities. Given the chance to move to one, hundreds of millions of people would go there to get a job, get an education for their children, and live in a place that is clean, safe, and healthy. Other people will make a profit by hiring them or supplying them with infrastructure and other services. If the rules let this happen, everyone can be better off. It doesn’t take any charity to build well-run cities.

Q. What kinds of rules would have to be specified in a charter for a new city?
A. Rules about public sanitation are a simple and familiar example. Without them, a city can’t be a healthy place to live; but these rules don’t just happen. The rules for a city are different from the ones for a village, but as a village slowly gets bigger, a city may be stuck with the rules of the village. In a village, it might be O.K. to rule that anyone can urinate anyplace they want. In a modern city, it is better to have a rule saying that people have to urinate into toilets connected to the sewer system. According to a recent news report, the city government in Paris is having trouble enforcing this rule. They have special police units that give tickets to men who urinate against walls. So when we speak of rules, we must understand both rules on paper and an effective system of enforcement. In many cities in poor countries, health is bad because governments don’t enforce basic rules about sanitation. The crime rate is appallingly high because the government doesn’t enforce rules that prohibit theft and violence. Traffic fatalities and congestion are both high because they don’t have good traffic rules or if they do, they don’t enforce them. The fact that people still flock to cities with such bad rules tells us something about how big the other benefits from living in a city must be. But given the choice, they would surely rather go to a city with good rules instead of one with bad rules.

Q. You have argued that new cities can speed up growth in the developing world. Aren’t the cities that the world needs springing up naturally? Why do we need the construct of a charter city to encourage faster or better urbanization?
A. Economists tend to assume that societies will naturally adopt good rules. If that were true, societies would put in place the rules needed to get the gains from a city and well-run cities would indeed spring up. The evidence suggests to the contrary that many societies are stuck with bad rules. Moving from bad rules to better ones may be much harder than most economists have allowed. The construct of a charter city is a suggestion about how we can change the dynamics of rules. It is a way to speed up the rate of improvement in the rules. There is an analogy that may be helpful here. Large corporations operate according to an internal set of rules that we sometimes call a corporate culture. A natural question to ask is what mechanisms lead to improvement in the rule-sets that prevail in all the corporations in an industry. If you think of an industry like computing, it is immediately evident that much of the change comes from the entry of new organizations. They have new rule-sets that attract resources away from the existing ones. IBM had good internal rules for working with big corporations and data centers, but they didn’t work as well for working with small businesses and individual consumers. If IBM had been the only company allowed to be in the computer business, it would have taken a very long time to get where we are now, with networked computers in our pockets. The entry of new organizations like Digital, Intel, and Apple that operated under very different internal sets of rules sped up change in the industry. Charter cities are a way to bring the power of entry and choice to the dynamics of the rules for cities.

Q. Let’s move on to logistics. Who might grant the charter for one of these cities and see that it will be enforced?
A. Different charters could specify different arrangements. This means that we could try many new types of innovative structures. If a national government has sufficient credibility, it could start a charter city within its own territory and administer it from the national capital. This is, in effect, what some countries have done when they have created special economic zones with rules that are different from the ones that prevail in the rest of the country. You could imagine that a country like India might try something like this to speed up urbanization by cutting through many local rules that get in the way of urban development. In poorer countries that don’t have the same kind of credibility with international investors, a more interesting but controversial possibility is that two or more countries might sign a treaty specifying the charter for a new city and allocate between them responsibilities for administering different parts of the treaty. Let me give you a specific example. Right now, the United States and Cuba have a treaty that gives the United States administrative control in perpetuity over a piece of sovereign Cuban territory, Guantanamo Bay. I’ve suggested that Canada and Cuba sign a new treaty in which Canada would take over administration of this area, bring Canadian rule of law there, and let a city grow up that could bring to Cuba some of the advantages that Hong Kong brought to China.

Q. Why will governments, particularly the entrenched, corrupt governments found in many countries, be willing to cede control of these zones?
A. First let me push back on an assumption that many people make and that seems to be implicit in your question. This assumption is that “bad guys” are why so many people are stuck living under bad rules. If you were a good guy and were the mayor of New York, would you be able to build enough consensus to implement congestion pricing for traffic, at least within our lifetimes? Or would you be strong enough to be able to coerce the people who don’t want it to go along? Narratives about good guys and bad guys are always entertaining, but there is a deeper reason why people get stuck under bad rules. For those of us who live in the United States, it is easier to understand in a context like New York that is more familiar. It is quite possible that its existing political system will never allow an improvement like congestion pricing, and yet many people would happily move to a new city that had sensible pricing and smoothly flowing traffic at all hours of the day. Systems of rules are “sticky”; they are difficult for any leader or group to change. With this in mind, suppose you were the president of Cuba. Suppose you wanted to do for Cuba what Deng Xiaoping did for China: engineer the transition from communism to rapid market-led growth. To do this, you might want to create a special zone where some of your citizens could opt-in to the market system without forcing others to make this change. You might be able to do this with a charter city that you control out of the president’s office. Now suppose you also want to make a binding commitment to rule-of-law protections for the foreign investors and potential residents from foreign countries you’d like to attract to this city. Investors from the rest of the world could finance the infrastructure for a new city in exchange for fee income from users. Entrepreneurs and managers from the rest of the world might come and run the businesses that would hire millions of people. Many of these highly educated and experienced people might be émigrés who left when the island turned to communism. These investors and these potential residents will come only if you can promise them the protections afforded by the rule of law. By yourself, with the Cuban institutions that you control, there is simply no way for you to make a credible binding commitment to the rule of law. You could simply change your mind later. More importantly, your successor, whomever that may be, might want to back out of any promises you make. The only way for you and your contemporaries to make a binding, long-term commitment is to sign a treaty with a country like Canada and to use it as a third-party guarantor. In effect, what a treaty lets you do is leverage the existing credibility of Canadian institutions and bring in the rule of law.

Q. But what if some future government in Cuba wants to violate the terms of the treaty and take the city over once it is built?
A. This is why the example of Guantanamo Bay is so revealing. In practice, countries around the world, even countries that can’t get along, still respect treaties. Cuba respects the treaty with the United States, even as they complain bitterly about it. Another good example is Hong Kong. The British clearly did not want to live up to the terms of the treaty they signed, which returned control of important parts of Hong Kong to China after 99 years. China didn’t want to wait that long to get Hong Kong back. But in the end, for 99 years, they stuck to the terms of the treaty they signed. Of course, in relations between countries there is always the possibility of an act of war that violates a treaty, but few nations are willing to cross such an explicit “bright red line.” Think back to how easy it was to mobilize a military reaction to Iraq’s invasion of Kuwait. The armed nations of the world don’t respond well to unilateral acts of war.

Q. It all sounds great as a theoretical exercise, but honestly, don’t your colleagues tell you that something like this will never happen?
A. They do say this, which is actually kind of ironic when you line it up with the other things they say. They recognize that the construct of a charter city is something that could make everyone better off. They admit that there is no technological or economic constraint that keeps us from building many of these. Then they say that for political reasons, it will never happen. They tell me that you can’t change politics; you can’t overcome nationalism; there is no way for countries to work together to extend the reach of good rules. Then these same economists suggest that we should just stick to business as usual. We should offer conventional economic advice and assume that political systems will naturally follow our advice when we point to something that could make everyone better off. But of course, they have already revealed that they don’t believe this. What’s going on here is a kind of self-censoring. Economists seem to think that we should propose things that are acceptable and that political systems will pursue, but that we should avoid proposing or even discussing things that are controversial or politically incorrect. I think we’d do our jobs better if we just said what’s true without trying to be amateur politicians. For example, back in the 1950’s and 1960’s, lots of development economists didn’t talk about the benefits of direct foreign investment and spoke instead of self-sufficiency because they thought that this was what the political actors in most poor countries wanted to hear. Now, of course, almost all developing nations are encouraging inward DFI. When we self-censored back then, we just slowed down movement toward global flows of technology via foreign investment. It happened despite what development economists said, not because of what they said. Think about the truly important changes in political systems. Back in the middle ages, suppose that someone described a legal system that enforced rules and contracts that everyone had to obey, even the country’s leaders. What would informed opinion of the day have been? “Great idea, but it will never happen.” No question it was hard to pull off, but it did happen. People always think that the unfamiliar is impossible. Many times, all that holds us back is a failure of imagination.

POST-SCARCITY
http://understandingsociety.blogspot.com/2010/06/social-progress.html
http://www.econlib.org/library/Enc/EconomicGrowth.html
http://reason.com/archives/2001/12/01/post-scarcity-prophet
Post-Scarcity Prophet
by Ronald Bailey / December 2001

reason: In terms of real per capita income, Americans today are seven times richer than they were in 1900. How did that happen?
Paul Romer: Many things contributed, but the essential one is technological change. What I mean by that is the discovery of better ways to do things. In most coffee shops these days, you’ll find that the small, medium, and large coffee cups all use the same size lid now, whereas even five years ago they used to have different size lids for the different cups. That small change in the geometry of the cups means that somebody can save a little time in setting up the coffee shop, preparing the cups, getting your coffee, and getting out. Millions of little discoveries like that, combined with some very big discoveries, like the electric motor and antibiotics, have made the quality of life for people today dramatically higher than it was 100 years ago. The estimate you cite of a seven-fold increase in income — that’s the kind of number you get from the official statistics, but the truth is that if you look at the actual change in the quality of life, it’s larger than the number suggests. People who had today’s average income in 1900 were not as well off as the average person today, because they didn’t have access to cheap lattés or antibiotics or penicillin.

reason: New Growth Theory divides the world into “ideas” and “things.” What do you mean by that?
Romer: The paper that makes up the cup in the coffee shop is a thing. The insight that you could design small, medium, and large cups so that they all use the same size lid — that’s an idea. The critical difference is that only one person can use a given amount of paper. Ideas can be used by many people at the same time.

reason: What about human capital, the acquired skills and learned abilities that can increase productivity?
Romer: Human capital is comparable to a thing. You have skills as a writer, for example, and somebody — reason — can use those skills. That’s not something that we can clone and replicate. The formula for an AIDS drug, that’s something you could send over the Internet or put on paper, and then everybody in the world could have access to it. This is a hard distinction for people to get used to, because there are so many tight interactions between human capital and ideas. For example, human capital is how we make ideas. It takes people, people’s brains, inquisitive people, to go out and find ideas like new drugs for AIDS. Similarly, when we make human capital with kids in school, we use ideas like the Pythagorean theorem or the quadratic formula. So human capital makes ideas, and ideas help make human capital. But still, they’re conceptually distinct.

reason: What do you see as the necessary preconditions for technological progress and economic growth?
Romer: One extremely important insight is that the process of technological discovery is supported by a unique set of institutions. Those are most productive when they’re tightly coupled with the institutions of the market. The Soviet Union had very strong science in some fields, but it wasn’t coupled with strong institutions in the market. The upshot was that the benefits of discovery were very limited for people living there. The wonder of the United States is that we’ve created institutions of science and institutions of the market. They’re very different, but together they’ve generated fantastic benefits. When we speak of institutions, economists mean more than just organizations. We mean conventions, even rules, about how things are done. The understanding which most sharply distinguishes science from the market has to do with property rights. In the market, the fundamental institution is the notion of private ownership, that an individual owns a piece of land or a body of water or a barrel of oil and that individual has almost unlimited scope to decide how that resource should be used. In science we have a very different ethic. When somebody discovers something like the quadratic formula or the Pythagorean theorem, the convention in science is that he can’t control that idea. He has to give it away. He publishes it. What’s rewarded in science is dissemination of ideas. And the way we reward it is we give the most prestige and respect to those people who first publish an idea.

reason: Yet there is a mechanism in the market called patents and copyright, for quasi-property rights in ideas.
Romer: That’s central to the theory. To the extent that you’re using the market system to refine and bring ideas into practical application, we have to create some kind of control over the idea. That could be through patents. It could be through copyright. It might even be through secrecy. A firm can keep secret a lot of what it knows how to do.

reason: A formula for Coca-Cola?
Romer: Yes. Or take a lot of the things that Wal-Mart understands about discount retailing. They have a lot of insight about logistics and marketing which they haven’t patented or copyrighted, yet they can still make more money on it than other people because they keep it closely held within the firm. So for relying on the market — and we do have to rely on the market to develop a lot of ideas — you have to have some mechanisms of control and some opportunities for people to make a profit developing those ideas. But there are other stages in the development of ideas. Think about the basic science that led to the discovery of the structure of DNA. There are some kinds of ideas where, once those ideas are uncovered, you’d like to make them as broadly available as possible, so everybody in the world can put them to good use. There we find it efficient to give those ideas away for free and encourage everybody to use them. If you’re going to be giving things away for free, you’re going to have to find some system to finance them, and that’s where government support typically comes in. In the next century we’re going to be moving back and forth, experimenting with where to draw the line between institutions of science and institutions of the market. People used to assign different types of problems to each institution. “Basic research” got government support; for “applied product development,” we’d rely on the market. Over time, people have recognized that that’s a pretty artificial distinction. What’s becoming more clear is that it’s actually the combined energies of those two sets of institutions, often working on the same problem, that lead to the best outcomes.

reason: We hear a lot of complaints from academicians about how business and corporations are taking over university research.
Romer: I think it’s important to have a distinct realm of science and a distinct realm of the market, but it’s also very good to have interaction between those two. One of the best forms of interaction is for people who work in one to move into the other. The people in university biology or biochemistry departments complain when they see somebody go on leave from the university and start a company that’s going to develop a new drug. That’s not the way it was done 30 years ago. But this is the best way to take those freely floating, contentiously discussed ideas from the realm of science and then get them out into the market process, because the reality is that there are virtually no ideas which generate benefits for consumers if there’s not an intervening for-profit firm which commercializes them, tailors them to the market, and then delivers them. You can point to examples where things jump right from science to benefits for the consumer, but that’s the exception, not the rule.

reason: Do we run the risk of ruining science by involving it too much in the market?
Romer: Well, some people would say that everything should be patented. The danger is that if you went that far, you could actually slow the discovery process down. There are very good theoretical reasons for thinking that market and property rights are the ideal solution for dealing with things, but there are also strong theoretical reasons for thinking that in the realm of ideas, intellectual property rights are a double-edged sword. You want to rely on them to some extent to get their benefits, but you want to have a parallel, independent system and then exploit the tension that’s created between the two.

reason: What are those theoretical reasons?
Romer: It traces back to this multiple use I was describing for ideas vs. single use for things. The miracle of the market system is that for objects, especially transformed objects, there’s a single price which does two different jobs. It creates an incentive for somebody to produce the right amount of a good, and it allocates who it should go to. A farmer looks at the price of a bushel of wheat and decides whether to plant wheat or plant corn. The price helps motivate the production of wheat. On the other side, when a consumer has to decide whether to buy bread or corn meal, the price allocates the wheat between the different possible users. One price does both jobs, so you can just let the market system create the price and everything works wonderfully. With ideas, you can’t get one price to do both things. Let me give an extreme example. Oral rehydration therapy is one of those few ideas which did actually jump immediately from science to consumer benefit. It’s a simple scientific insight about how you can save the life of a child who’s suffering from diarrhea. Literally millions of lives have been saved with it. So what price should you charge people for using it? Because everybody can use the idea at the same time, there’s no tragedy of the commons in the intellectual sphere. There’s no problem of overuse or overgrazing or overfishing an idea. If you give an idea away for free, you don’t get any of the problems when you try and give objects away for free. So the efficient thing for society is to offer really big rewards for some scientist who discovers an oral rehydration therapy. But then as soon as we discover it, we give the idea away for free to everybody throughout the world and explain “Just use this little mixture of basically sugar and salt, put it in water, and feed that to a kid who’s got diarrhea because if you give them pure water you’ll kill them.” So with ideas, you have this tension: You want high prices to motivate discovery, but you want low prices to achieve efficient widespread use. You can’t with a single price achieve both, so if you push things into the market, you try to compromise between those two, and it’s often an unhappy compromise. The government doesn’t pay drug companies prizes for coming up with AIDS drugs. It says they’ve got to incur these huge expenses, but then if they succeed, they can charge a high price for selling that drug. This has generated a lot of progress and we’re prolonging the life of people with AIDS, but the high price is also denying many people access to those drugs.

reason: Over the broad sweep of human history, technological progress and economic growth were painfully slow. Why has it sped up now?
Romer: It’s so striking. Evolution has not made us any smarter in the last 100,000 years. Why for almost all of that time is there nothing going on, and then in the last 200 years things suddenly just go nuts? One answer is that the more people you’re around, the better off you’re going to be. This again traces back to the fundamental difference I described before. If everything were just objects, like trees, then more people means there’s less wood per person. But if somebody discovers an idea, everybody gets to use it, so the more people you have who are potentially looking for ideas, the better off we’re all going to be. And each time we made a little improvement in technology, we could support a slightly larger population, and that led to more people who could go out and discover some new technology. Another answer is that we developed better institutions. Neither the institutions of the market nor the institutions of science existed even as late as the Middle Ages. Instead we had the feudal system, where peasants couldn’t decide where to work and the lord couldn’t sell his land. On the science side, we had alchemy. What did you do if you discovered anything? You kept it secret. The last thing you’d do was tell anybody.

reason: How did the better institutions come about?
Romer: That’s one of the deep questions. There’s some kind of political process, some group decision process, which leads to institutions. If you go back to what I said a minute ago about the advantages of having many people, you can see that there’s a tension here. There are huge benefits to having more people and having us all interact amongst ourselves to create goods and to share ideas. But you face a really big challenge in trying to coordinate all of those decisions, because if you have large numbers of independent decision makers who aren’t coordinating their actions appropriately, you could get chaos. Think about millions of drivers with no rules of the road, no agreement about whether you drive on the left or the right. So where do these institutions come from? It was a process of discovery, just as people discovered how to make bronze. They also discovered ways to organize political life. We can use democratic choice as an alternative to, say, a hereditary system of selecting who’s the king. What’s subtle here is, How do those discoveries get into action? It’s not like a profit motive in a firm that brings software to market. There was a process of persuasion when somebody discovered that, hey, this would be a better way for us to organize ourselves. So we had political and economic thinkers — Locke, Hobbes, Smith — who managed to persuade some of their peers to adopt those institutions. So institutions came from a combination of discovery, persuasion, adoption — and then copying. When good institutions work somewhere in the world, other places can copy them.

reason: Many economic historians are critical of New Growth Theory. Economic growth is a modern phenomenon, yet it appears that New Growth Theory should apply equally to the Roman Empire or Ming China as well as the modern world.
Romer: I think that’s a caricature of the theory. New Growth Theory describes what’s possible for us but says very explicitly that if you don’t have the right institutions in place, it won’t happen. If anything, it was the old style of theory which made it sound like technological change falls from the sky like manna from heaven, regardless of how we structure our institutions. This new theory says technological change comes about if you have the right institutions, which we have had.

reason: So what’s the crucial difference between Ming China and modern economies today?
Romer: Ming China was very advanced. It had steel. It had clocks. It had movable type. Yet it was far from generating either the modern institutions of science or the institutions of the market. The market and science differ in their treatment of property rights, but they’re similar in that they rely on individuals who are free to operate under essentially no constraints by authority or tradition. It took a special set of historical circumstances to persuade people that things could work if you freed people, within certain institutional constraints, to pursue their own interests. This is where Ming China was very far away from modern notions. Part of the answer to this big question about human history has been the acceptance of relatively unfettered freedom for large numbers of individuals. It’s something we just take for granted, but if you described it in the abstract to the people of 50,000 years ago, they would never believe it could possibly work. They were conditioned to systems where there was the head man or the chief, and as numbers got at all large, there was a sense that you had to have somebody with kind of dictatorial control. It was a deep philosophical insight and deep change in the whole way we viewed the world to tolerate and accept and then truly celebrate freedom. Freedom may be the fundamental hinge on which everything turns.

reason: You often cite the combinatorial explosion of ideas as the source of economic growth. What do you mean by that?
Romer: On any conceivable horizon — I’ll say until about 5 billion years from now, when the sun explodes — we’re not going to run out of discoveries. Just ask how many things we could make by taking the elements from the periodic table and mixing them together. There’s a simple mathematical calculation: It’s 10 followed by 30 zeros. In contrast, 10 followed by 19 zeros is about how much time has elapsed since the universe was created.

reason: Of all those billions of combinations, the vast majority are probably going to be useless. So how do you find the useful ones?
Romer: This is why science and the market are so important for this discovery process. It’s really important that we focus our energy on those paths that look promising, because there are many more dead ends out there than there are useful things to discover. You have to have systems which explore lots of different paths, but then those systems have to rigorously shut off the ones that aren’t paying off and shift resources into directions which look more promising. The market does this automatically. The institutions of science could tip either way. In American science, we have vigorous competition between lots of different universities, which leads to a kind of marketplace of ideas. You can think of other institutions of science that aren’t nearly as competitive. In the national laboratories, people are in the worst case civil servants: They’re there for life, and there’s always more funding for them.

reason: Does New Growth Theory give us some new insights on how to think about monopolies?
Romer: There was an old, simplistic notion that monopoly was always bad. It was based on the realm of objects — if you only have objects and you see somebody whose cost is significantly lower than their price, it would be a good idea to break up the monopoly and get competition to reign freely. So in the realm of things, of physical objects, there is a theoretical justification for why you should never tolerate monopoly. But in the realm of ideas, you have to have some degree of monopoly power. There are some very important benefits from monopoly, and there are some potential costs as well. What you have to do is weigh the costs against the benefits. Unfortunately, that kind of balancing test is sensitive to the specifics, so we don’t have general rules. Compare the costs and benefits of copyrighting books versus the costs and benefits of patenting the human genome. They’re just very different, so we have to create institutions that can respond differentially in those cases.

reason: You have written, “There is absolutely no reason why we cannot have persistent growth as far into the future as you can imagine.” Your Stanford colleague, the biologist Paul Ehrlich, disagrees. He believes that economic growth is an unsustainable cancer that is destroying the planet. How would you go about convincing people like Ehrlich that they are wrong?
Romer: Paul seems singularly immune to being convinced. He has been on the wrong side of these issues, so I wouldn’t set that as my standard of persuading anybody. However, if I took a neutral observer who might listen to me and Paul, there’s a pretty easy way to explain why I’m right and why Paul misunderstands. You have to define what you mean by growth. If by growth you mean population, more people, then Paul is actually right. There are physical limits on how many people you can have on Earth. If we took peak population growth rates from the ’70s at 2 percent per year, you can only sustain that for a couple of hundred years before you really run into true physical constraints.

reason: I would remind you that Ehrlich said that there would be billions of people dying of starvation in the 1980s.
Romer: He got the potentials wrong and the time frame wrong, but it’s absolutely true that population growth will have to come to zero at some point here on Earth. The only debate is about when. Now, what do I mean when I say growth can continue? I don’t mean growth in the number of people. I don’t even mean growth in the number of physical objects, because you clearly can’t get exponential growth in the amount of mass that each person controls. We’ve got the same mass here on Earth that we had 100,000 years ago and we’re never going to get any more of it. What I mean is growth in value, and the way you create value is by taking that fixed quantity of mass and rearranging it from a form that isn’t worth very much into a form that’s worth much more. A canonical example is turning sand on the beach into semiconductors.

reason: What do you make of the recent protests against globalization?
Romer: When we were describing the broad sweep of human history, we talked about how hard it was for people to get used to the idea of freedom. There was another kind of adjustment that we had to make as well: We had to get used to the idea of the market, and especially market exchange among anonymous strangers. People often contrast this with the institutions of the family, where you’ve got notions of sharing and mutual obligation. Many of us have a deep psychological intuition rooted in our evolutionary history that makes us feel warmly toward the family and suspicious of large, impersonal, anonymous market exchange. I think that emotional impulse is part of what some of the environmental ideologues draw on when they attack the whole market system and corporations and modern science and everything. This is a case where human psychology that was attuned to a hunter-gatherer environment is just a little bit out of touch with a new world that’s much more interconnected, much more interactive, and in many ways a much more satisfying and rich human experience. You can idealize life in a hunter-gatherer society, but nobody wants to go through the frequent death of a child — a very common experience for almost all of history that has been reduced a phenomenal degree within human memory.

reason: How would you convince protestors of the benefits of globalization?
Romer: First, just look at the facts. The protestors are amazingly ignorant about what has happened in terms of, say, life expectancy. Life expectancy for people in the poorest countries of the world is now better than life expectancy in England when Malthus was so worried about it. Then you look at the variation of experience between the poor countries that have done best and the ones that have done worst, and try to see what the correlations are. Which countries did best? Was it the countries that adopted the market most strongly, embraced foreign investment, and tried to adopt property rights? Or was it the other countries? The evidence again is clear. One of the untold stories about the ’80s and ’90s was the really dramatic turnaround in the developing world that took place on this issue. If you track the legislative history on foreign investment, you see a colonial legacy, even as late as the ’70s, where developing countries have laws designed to keep corporations out. Then there’s this dramatic turnaround as they saw the benefits that a few key economies received by inviting in foreign investment. It’s not the people from the developing world who are making the argument that Nike is a threat to their sovereignty or well-being. It’s people in the United States. The people in the developing world understand pretty clearly where their self-interest lies.

reason: What about boosting economic growth in developed countries?
Romer: For Europe and the United States, I think we need to be thinking very hard about how we can restructure our institutions of science. How can we restructure our system of higher education? How can we make sure that it has the benefits of vigorous competition and free entry, especially of those bright young people who might do really different kinds of things? We should not assume that we’ve already got the ideal institutions and the only thing we need to do is just throw more money at them. Unfortunately, I think a lot of countries have a long way to go to catch up to the state where we are in the United States — and I’m not that happy about where we are in the United States. Many European countries simply have not recognized the power of competition between institutions. So they have monolithic, state-run university systems. That stifles competition between individual researchers and slows down the whole innovative process. They also need to let people move more flexibly from the university into the private sector and back. This is something that many countries watching venture capital start-ups have become aware of, although they’ve been slower to get their institutions to adjust.

reason: In your recent paper on doing R&D, you said you think it would be possible to raise the growth rate from its average rate of 1.8 percent between 1870 and 1992 to 2.3 percent.
Romer: Well, I was trying to set a goal. When you’re thinking about the future, you never really know what we’re going to discover, but I think there’s a reason to set for ourselves an ambition of trying to raise the rate of growth by half a percent per year. The United States achieved about 0.5 percent a year faster growth than the U.K. did since 1870, so we’ve got a historical precedent for creating institutions which lead to better innovation of the market and strengthen science significantly. We should aim for that kind of improvement again.

reason: Why would that be important?
Romer: As you accumulate these growth rates over the decades, we get much higher levels of income. That lets us deal more effectively with all the problems we face, whether it’s making good on commitments to pay for people’s health care as they get older, preserving more of the environment, or providing resources so that people can have time to be out of the labor market for a certain period of time — when they’re raising kids, say, or when they want to take an extended sabbatical. Income per capita in 2000 was about $36,000 in year 2000 dollars. If real income per person grows at 1.8 percent per year, by 2050 it will increase to $88,000 in year 2000 purchasing power. Not bad. But if it grows at 2.3 percent per year, it will grow to about $113,000 in year 2000 purchasing power. In today’s purchasing power, that extra $25,000 per person is equal to income per capita in 1984. So if we can make the choices that increase the rate of growth or real income per person to 2.3 percent per year, in 50 years we can get extra income per person equal to what in 1984 it had taken us all of human history to achieve. One policy innovation, for example, that would boost the growth rate would be to subsidize universities to train more undergraduate and graduate students in science and engineering. Also, you could give graduate students portable fellowships that they could use to pay for training in any field of natural science and engineering at any institution the students choose. Graduate students would no longer be hostage to the sometimes parochial research interests of university professors. Portable fellowships would encourage lab directors and professors to develop programs that meet the research and career interests of the students.

reason: What’s next in New Growth Theory? Any conceptual breakthroughs on the horizon?
Romer: Because the economics of ideas are so different from the economics of markets, we’re going to have to develop a richer understanding of non-market institutions, science-like institutions. This is going to be a new endeavor for economics.

reason: Do you think that there is a big role for economic historians in helping uncover this richer theory?
Romer: History is an absolutely essential body of evidence, because you can’t make inferences about long-run trends using year-to-year or quarter-to-quarter data.

reason: There is a growing movement against technological progress around the world. Why is there this negative reaction to technological progress and what can we do about it?
Romer: You’re a big believer in turmoil and creative destruction when you’re early in life, because you can knock down the old and create your new thing. Once you achieve a certain level, you tend to get very conservative and try to slow the gales down, because they might blow you over. So I think we have to seriously commit ourselves to maintaining space for new entrants and for young people. That’s one way to keep the process going. Another is to do what scholars have always done: to proselytize, to dissect incoherent arguments. I think we’ll be able to maintain this dynamic of progress that was unleashed a couple centuries ago. There will be small setbacks and a lot of noise and complaining, but the opportunities and the benefits are just too great to pull back.

reason: Could anything stop economic growth and technological progress?
Romer: Even if one society loses its nerve, there’ll be new entrants who can take up the torch and push ahead. Mancur Olson talks about Caldwell’s Law, the idea that no nation has remained truly innovative for very long. Look at Italy, and then Holland, and then the U.K., and then the United States. The pessimistic interpretation is that nobody can keep the process going. The optimistic interpretation is, Yes, you can, but somebody else comes along and the progress moves from one place to the next. We’ve seen individual societies where conservative or reactionary elements suppress the changes. What has protected us in the past is that there were other nations that could try new paths. You didn’t have the same political dynamic everywhere at once. If in the far future we reach a situation where there really is truly global political control — if multinational institutions grow more powerful over economic affairs so that there is imposed uniformity across all nations — then there’d be a loss of diversity. And if the reactionary elements got in control of those institutions, there’d be no room for the new entrant, the upstart, to adopt new ideas. But that’s a pretty distant and unlikely prospect.

3rd PARTY OUTSIDE CONSULTANT
http://globalguerrillas.typepad.com/files/congressional-testimony1.pdf
http://globalguerrillas.typepad.com/globalguerrillas/2004/12/legitimacy_101.html
http://globalguerrillas.typepad.com/globalguerrillas/2005/08/neotribalism.html
http://globalguerrillas.typepad.com/globalguerrillas/2010/06/journal-resilient-detroit.html
http://www.boingboing.net/2010/06/15/john-robb-interview.html
John Robb interview: Open Source Warfare & Resilience
by Chris Arkenberg / Jun 15, 2010

John Robb is a globally-recognized author, technologist, and entrepreneur specializing in the complex systems of insurgency and asymmetrical warfare. His book, Brave New War, is an Amazon best-seller and established his expertise as a researcher & military consultant. He has been featured in the New York Times, The Economist, and the Wall Street Journal. His daily thoughts are collected on his blog, Global Guerrillas.

Q. In your book Brave New War you explore the changing nature of warfare. What are some recent examples of insurgency, resource conflicts, or terrorism that you feel best illustrate this new landscape?
A. Here’s an interesting story that may do the trick. Back in 2004, the US military was getting trounced in guerrillas in Iraq. Worse, the US military establishment didn’t know why. Didn’t have a clue. To correct this, I began to write about how 21st Century warfare actually worked on my blog, Global Guerrillas. Essentially, I concluded that guerrilla groups could use open source organizational models (drawn from the software industry), networked super-empowerment (freely available high tech tools, network information access, connections to a globalized economy), and systems disruption (the targeting of critical points on infrastructure networks that cause cascading failures) to defeat even the most powerful of opponents, even a global superpower.

The new theories of warfare I developed on the blog proved both predictive and very popular. As a result, I spent a lot of time on the speaking circuit in Washington DC (DoD, CIA, NSA, etc.). Of course, since my work was on a blog everyone could read it, even the guerrillas themselves.So, it was a little surprising although not unexpected when I got an e-mail in 2009 from Henry Okah, a leader of MEND (the Movement for the Emancipation of the Niger Delta). He invited me to Nigeria and stated that he was an avid reader of my blog.

It was a moment out of history, as if the UK’s General Liddell Hart (the originator of blitzkrieg armored warfare) got a note from Germany’s tank General Heinz Guderian in 1939, thanking him for his work. Here’s why: MEND’s campaign against Shell (the oil company) and the Nigerian government between 2006 and 2008 was a great example of how I thought 21st Century warfare would be fought. The organization structure was loose and organized along the lines of an open source movement. Lots of small autonomous groups joined together to take down the country’s oil infrastructure by targeting vulnerable points in the network (Nigeria is a major global oil exporter). During 2007, they were able to take out one million barrels a day of oil production. This shortfall was the reason oil prices rose to $147 a barrel. Those high prices had a negative global economic impact: the start of a global recession and a spike in default rates in US sub-prime mortgages (due to higher driving and food costs). That spike in sub-prime mortgage default rates radically accelerated the demise of our grossly over leveraged global financial sector, which in turn led to the financial panic of 2008.

In short, MEND’s disruption campaign, yielded tens of trillions of dollars in global economic damage for tens of thousands of dollars spent on making the attacks. That’s a return on investment (ROI) of 1,000,000,000%. How do nation-states survive when an unknown guerrilla group in a remote corner of the world can generate returns on that magnitude? They don’t.

Q. The United States is suffering both the economic decline of its industry and the ongoing dismantling of the social welfare apparatus supporting the citizenry. In your opinion, will this inevitably lead to some form of armed insurgency in America?
A. Yes. The establishment of a predatory and deeply unstable global economic system – beyond the control of any group of nations – is in the process of gutting developed democracies. Think in terms of the 2008 crisis, over and over again. Most of what we consider normal in the developed world, from the middle class lifestyle to government social safety nets, will be nearly gone in less than a decade. Most developed governments will be in and out of financial insolvency. Democracy, as we knew it, will wither and the nation-state bureaucracy will increasingly become an enforcer for the global bond market and kleptocratic transnational corporations. Think Argentina, Greece, Spain, Iceland, etc. As a result, the legitimacy of the developed democracies will fade and the sense of betrayal will be pervasive (think in terms of the collapse of the Soviet Union). People will begin to shift their loyalties to any local group that can provide for their daily needs. Many of these groups will be crime fueled local insurgencies and militias. In short, the developed democracies will hollow out.

Q. How big of a domestic threat is there from the narco-insurgency in Mexico and the growing power of Latin American gangs in America?
A. Very big. A threat that dwarfs anything we face in Afghanistan (a useless money pit of a war). It’s not a threat that can be solved by conventional military means, since the problem is that Mexico is a hollow state. Unlike a failed state like Somalia (utter chaos), a hollow state still retains the facade of a nation (borders, bureaucracy, etc.). However, a hollow state doesn’t exert any meaningful control over the countryside. It’s not only that the state can’t do it militarily, they don’t have anything they can offer people. So, instead, control is ceded to local groups that can provide basic levels of opt-in security, minimal services, and jobs via new connections to the global economy – think in terms of La Familia in Michoacana. The real danger to the US is that not only will these groups expand into the US (they already have), it is that these groups will accelerate the development of similar homegrown groups in the US as our middle class evaporates.

Q. Do you see a diminishing role for the state in large-scale governance? Does this compel communities to do it for themselves?
A. Yes, large scale governance is on the way out. Not only are nearly all governments financially insolvent, they can’t protect citizens from a global system that is running amok. As services and security begin to fade, local sources of order will emerge to fill the void. Hopefully, most people will opt to take control of this process by joining together with others to build resilient communities that can offer the independence, security, and prosperity that isn’t offered by the nation-state anymore. However, this is something you will have to build for yourself. Nobody is going to help you build it.

Q. In what ways are the new methods of insurgency & terror instructive towards building strategies for resiliency?
A. Here are a few of the parallels:
* Powerful technologies. Inexpensive tools that make it possible to produce locally what it used to take a global economy to produce.
* Networks. The ability to draw on the ideas of hundreds of thousands of people working on the same problems through open source tinkering networks. The ability to create new economic networks that accelerate prosperity.

Q. You’re currently writing a book about local resiliency. What are the primary global drivers behind your interest in resiliency?
A. Yes, I am. It’s about building resilient communities. Communities that offer energy independence, food security, economic prosperity, and protection. What are the global drivers that make resiliency important? Simply: stability, prosperity, and security is going away. You will soon find you are on your own, if you haven’t already. If you do nothing, you will suffer the predations of gangs, militias, and corrupt bureaucracies that will fill the void left by retreating nation-states. If you want to avoid this fate, you can build resilient communities that not only allow you and your family to survive intact, but to thrive. My goal with my new book, is to provide people with a road map on how to build resilient communities from scratch.

Q. What is the core messages you have to communities about preparing for the coming age?
A. Produce everything you can locally. Virtualize everything else. The value of your home will be based on the ability of your community to offer energy independence, food security, economic vitality, and protection. Survivalist stockpiles and zero footprint frugality are pathways to failure. Think in terms of vibrant local economic ecosystems that are exceedingly efficient, productive, and bountiful.

MEGA-CITY BEST PRACTICES
http://ngm.nationalgeographic.com/ngm/0211/feature3/
http://www.megacities.nl/archive.html
http://www.megacitiesproject.org/pdf/success_stories.pdf

http://www.megacitiesproject.org/trans_1.php

Curitiba’s “Surface Metro” to New York: The “Surface Metro” system uses dedicated bus lanes, and cylindrical loading tubes which allow passengers to pay in advance and board quickly. When the bus pulls alongside the tube, the bus driver opens the bus and tube doors, and the passengers walk directly onto the bus. The reduced dwell time required by the buses at the tube station results in less waiting time, increased speed and roadway capacity, and lessened air pollution. In 1992, the system was demonstrated in New York where four of the tubes and buses were installed in lower Manhattan, with buses operating for six weeks.

Sao Paulo’s Alert II to New York City: Alert II was an air pollution reduction program in Sao Paulo utilizing publicly-displayed air pollution monitors and a comprehensive public education campaign to voluntarily close down the streets of downtown Sao Paulo on dangerously smoggy days. The program was adapted in New York City by a task force including Commissioner of Environmental Protection Albert Appleton and Commissioner of Transportation Gerard Soffian. The New York version of Alert II, which was called “Green Alert/No-Drive Day” involved shutting down Park Avenue to traffic on World Environment Day, June 3, 1993.

Bangkok’s Magic Eyes Anti-littering program to Rio de Janeiro and Los Angeles: Magic Eyes is a unique anti-littering campaign targeted at children age 6-16. It utilizes green cartoon eyes (derived from traditional Thai mythology) which remind the children with songs and rhymes to pick up litter, and remind their parents to do the same. This program, which has reduced littering in Bangkok by an estimated 90% is now being replicated in Rio de Janeiro as part of the Clean Rio campaign through the Department of Sanitation and the School System. The enigmatic green eyes of the Thai version have been re-interpreted as a playful cartoon extraterrestrial more appropriate to the Brazilian culture. This innovation is also being adapted in Los Angeles, through the efforts of LA’s Best, an organization based in the Mayor’s office which designs and runs children’s educational programs.

Cairo’s Zabbaleen initiative to Manila and Bombay: In Cairo, the Zabbaleen people have eked out their existence for centuries by collecting trash and selling it to manufacturers capable of recycling it. Through the Zabbaleen initiative, the Zabbaleen have been given the training, equipment, and start-up funds necessary to organize small micro-enterprises where they convert the trash into marketable products, such as shoes, textiles, or pots and pans. In this way, the Zab baleen receives the benefits of adding value to the recyclable and can channel their profits into improving their community through the creation of better housing, schools, and health care centers. The Zabbaleen initiative is now being replicated in Bombay through the Bombay Municipal Corporation, which is incorporating the innovation into their “rag-pickers initiative”, in Manila through the Partnership of Philippine Support Service Agencies and it will also be replicated in Los Angeles by the Concerned Citizens of South Central (a community-based organization) as part of the W. K. Kellogg funded Urban Leadership for the 21st Centuty Project.

New York City’s “City Harvest” to Sao Paulo and Rio de Janeiro: City Harvest is a non-profit organization in New York City which collects unused, unserved food from restaurants and redistributes it to soup kitchens and homeless shelters. In 1992, the basic idea of this innovation was introduced to a number of key government leaders in Rio de Janeiro and Sao Paulo and was incorporated into the National Campaign Against Hunger and Misery, coordinated by IBASE.

Los Angeles’ Small Business Toxic Minimization Program to Rio de Janeiro and Buenos Aires: Through the Small Business Toxic Minimization Program, retired chemical and environmental engineers are enlisted to site visit small businesses and help them to find creative ways to reduce toxic waste, while maximizing their bottom line profit as well. In 1992, the project was transferred to Rio de Janeiro where it is now being tested on a small scale by the Guanabara Bay De-Pollution Group. This year, it is also being replicated by the Mayor’s office of Avelleneda, one of the municipalities comprising Greater Buenos Aires. Through the Small Business Toxic Minimization Program, retired chemical and environmental engineers are enlisted to site visit small businesses and help them to find creative ways to reduce toxic waste, while maximizing their bottom line profit as well. In 1992, the project was transferred to Rio de Janeiro where it is now being tested on a small scale by the Guanabara Bay De-Pollution Group. This year, it is also being replicated by the Mayor’s office of Avelleneda, one of the municipalities comprising Greater Buenos Aires.

Bombay’s “Child-to-Child” Community Health Care program to Rio de Janeiro: Through the Child-to Child Program, children in Bombay’s squatter settlements are trained as mini-doctors who teach their friends and family about basic approaches to curative and preventative health care. The program is being adapted for implementation in Rio de Janeiro, by a team led by Maria Teresa Ewbank, who represents the Escola Nacional de Daude, ENSP.

‘UNSTOPPABLE’, ‘ENDLESS CITIES’
http://www.guardian.co.uk/world/2010/mar/22/un-cities-mega-regions
UN report: World’s biggest cities merging into ‘mega-regions’
Trend towards ‘endless cities’ could significantly affect population and wealth in the next 50 years
by John Vidal / 22 March 2010

The world’s first mega-city, comprised of Hong Kong, Shenhzen and Guangzhou, home to about 120 million people. Photograph: Nasa
The world’s mega-cities are merging to form vast “mega-regions” which may stretch hundreds of kilometres across countries and be home to more than 100 million people, according to a major new UN report. The phenomenon of the so-called “endless city” could be one of the most significant developments – and problems – in the way people live and economies grow in the next 50 years, says UN-Habitat, the agency for human settlements, which identifies the trend of developing mega-regions in its biannual State of World Cities report.

The largest of these, says the report – launched today at the World Urban Forum in Rio de Janeiro – is the Hong Kong-Shenhzen-Guangzhou region in China, home to about 120 million people. Other mega-regions have formed in Japan and Brazil and are developing in India, west Africa and elsewhere. The trend helped the world pass a tipping point in the last year, with more than half the world’s people now living in cities. The UN said that urbanisation is now “unstoppable”. Anna Tibaijuka, outgoing director of UN-Habitat, said: “Just over half the world now lives in cities but by 2050, over 70% of the world will be urban dwellers. By then, only 14% of people in rich countries will live outside cities, and 33% in poor countries.”

The development of mega-regions is regarded as generally positive, said the report’s co-author Eduardo Lopez Moreno: “They [mega-regions], rather than countries, are now driving wealth. Research shows that the world’s largest 40 mega-regions cover only a tiny fraction of the habitable surface of our planet and are home to fewer than 18% of the world’s population [but] account for 66% of all economic activity and about 85% of technological and scientific innovation,” said Moreno. “The top 25 cities in the world account for more than half of the world’s wealth,” he added. “And the five largest cities in India and China now account for 50% of those countries’ wealth.” The migration to cities, while making economic sense, is affecting the rural economy too: “Most of the wealth in rural areas already comes from people in urban areas sending money back,” Moreno said.

The growth of mega-regions and cities is also leading to unprecedented urban sprawl, new slums, unbalanced development and income inequalities as more and more people move to satellite or dormitory cities. “Cities like Los Angeles grew 45% in numbers between 1975-1990, but tripled their surface area in the same time. This sprawl is now increasingly happening in developing countries as real estate developers promote the image of a ‘world-class lifestyle’ outside the traditional city,” say the authors.

Urban sprawl, they say, is the symptom of a divided, dysfunctional city. “It is not only wasteful, it adds to transport costs, increases energy consumption, requires more resources, and causes the loss of prime farmland.” “The more unequal that cities become, the higher the risk that economic disparities will result in social and political tension. The likelihood of urban unrest in unequal cities is high. The cities that are prospering the most are generally those that are reducing inequalities,” said Moreno.

In a sample survey of world cities, the UN found the most unequal were in South Africa. Johannesburg was the least equal in the world, only marginally ahead of East London, Bloemfontein, and Pretoria. Latin American, Asian and African cities were generally more equal, but mainly because they were uniformly poor, with a high level of slums and little sanitation. Some of the most the most egalitarian cities were found to be Dhaka and Chittagong in Bangladesh.

The US emerged as one of the most unequal societies with cities like New York, Chicago and Washington less equal than places like Brazzaville in Congo-Brazzaville, Managua in Nicaragua and Davao City in the Phillippines. “The marginalisation and segregation of specific groups [in the US] creates a city within a city. The richest 1% of households now earns more than 72 times the average income of the poorest 20% of the population. In the ‘other America’, poor black families are clustered in ghettoes lacking access to quality education, secure tenure, lucrative work and political power,” says the report.

The never-ending city
Cities are pushing beyond their limits and are merging into new massive conurbations known as mega-regions, which are linked both physically and economically. Their expansion drives economic growth but also leads to urban sprawl, rising inequalities and urban unrest. The biggest mega-regions, which are at the forefront of the rapid urbanisation sweeping the world, are:
• Hong Kong-Shenhzen-Guangzhou, China, home to about 120 million people;
• Nagoya-Osaka-Kyoto-Kobe, Japan, expected to grow to 60 million people by 2015;
• Rio de Janeiro-São Paulo region with 43 million people in Brazil.

The same trend on an even larger scale is seen in fast-growing “urban corridors”:
• West Africa: 600km of urbanisation linking Nigeria, Benin, Togo and Ghana, and driving the entire region’s economy;
• India: From Mumbai to Dehli;
• East Asia: Four connected megalopolises and 77 separate cities of over 200,000 people each occur from Beijing to Tokyo via Pyongyang and Seoul.

NO DEFENSES
http://findarticles.com/p/articles/mi_m0JIW/is_4_56/ai_110458726/
http://www.cca.qc.ca/en/study-centre/1007-what-is-the-city-as-bruce-lee-geoff-manaugh
The Future of War and the Indirect City

In 1564, the Tuscan urban planner, archaeologist, military theorist, mathematician and writer Girolamo Maggi published a work of military urbanism called Della fortificatione delle città, written by his colleague Giacomo Fusto Castriotto. That work, on the fortification of cities, devoted several passages to what might be called indirect or soft fortification: that is, protecting an urban population from attack not through the use of heavy walls, inner citadels, or armed bastions—although the book is, of course, filled with such things—but through a complex street plan.

Indirect streets and narrow walkways could be put to use, Castriotto and Maggi argued, as agents of spatial disorientation, leading an invader everywhere but where they actually wanted to go. It was a kind of urban judo, or the city as martial art. The city itself could be weaponized, in other words, its layout made militarily strategic: turning the speed at which your enemy arrives into exactly what would later entrap him, lost, unable to retrace his footsteps, fatally vulnerable and spatially exposed.

The CCA exhibited much of its collected manuscripts on urban fortification seventeen years ago, under the name The Geometry of Defence: Fortification Treatises and Manuals, 1500-1800. In the accompanying pamphlet, curator and former CCA historiographer Michael J. Lewis describes the geometric complexification that the fortified cities of the Renaissance underwent in the name of self-protection (Alberto Pérez-Gómez’s Architecture and the Crisis of Modern Science also contains a very lengthy history of this same material and is well worth consulting in full). A constantly shifting imbalance of power between the wall-builders and the invaders led to new spatializations of the metropolis. Whether due to the invention of gunpowder, massed assaults or simply new building techniques, the urban landscape was constantly reformatted according to the weapons that might be used against it.

Of course, this will be a very familiar story to most readers, so I don’t want to repeat it; I do, however, want to focus on the idea of forsaking mass—thick walls—for complexity in the name of strategic disorientation. There are well-known stories, for instance, of English coastal villages during World War II removing their road and street signs so as to prevent logical navigation by German aggressors, even erecting dummy signs to send confused Nazi paratroopers wandering off in the wrong direction.

But if the well-fortified Renaissance city could be seen, for the sake of argument, as something like the Hummer of military urbanism, what is the city-as-Bruce-Lee? A city that is lean, even physically underwhelming, but brilliantly fast and highly flexible? What is the city that needs no defensive walls at all?

There are a variety of possible answers here, all of which would be interesting to discuss; but I’m most struck by the possibility that the phenomenon recently dubbed the feral city is, in a sense, the anti-fortress in exactly this spatial sense. In a 2003 paper for the Naval War College Review, author Richard J. Norton describes the feral city as “a great metropolis covering hundreds of square miles. Once a vital component in a national economy, this sprawling urban environment is now a vast collection of blighted buildings, an immense petri dish of both ancient and new diseases, a territory where the rule of law has long been replaced by near anarchy in which the only security available is that which is attained through brute power.” From the perspective of a war planner or soldier, Norton explains, the feral city is spatially impenetrable; it is a maze resistant to aerial mapping and far too dangerous to explore on foot. Indeed, its “buildings, other structures, and subterranean spaces would offer nearly perfect protection from overhead sensors, whether satellites or unmanned aerial vehicles,” Norton writes, creating, in the process, an environment where soldiers are as likely to die from rabies, tetanus, and wild dog attacks as they are from armed combat.

I’m led to wonder here what a 21st-century defensive literature of the feral city might look like—from temporary barricades to cartographically incoherent slums experimenting with limited forms of micro-sovereignty. If the feral city is a city with no external walls but an infinite interior—endless spaces made of oblique architecture and indirect streets—then its ability to defend itself comes precisely through letting invaders in and disorienting them, not by keeping people out.

So if a city does away with defensive walls altogether, what specific spatial strategies are left for it to protect itself? For instance, can a city deliberately be made feral as an act of preemptive self-defense—and, if so, what architectural steps would be necessary to achieve such a thing? Channeling Archigram—or perhaps even Cisco—we might call this the insurgent instant city complete with its own infrastructural practices, its own rogue designers, and its own anti-architects.

How, then, could the spatial practice of urban feralization be codified, and what architectural lessons might be learned if this were to happen? Michael J. Lewis, describing the treatises on display at the CCA nearly two decades ago for The Geometry of Defence, refers to “fortification literature” or “the literature of the fortification,” including the publishing practices peculiar to this—for its time—top secret field of study. Privately circulated manuscripts, incomplete essayistic reflections, and even word of mouth only gradually solidified into full-length narratives; only at that point were they intended to communicate finely tuned, often firsthand, military knowledge of the city under siege to anyone who might want to discover it, whether that was a king, a layperson, or an enemy general (indeed, much of the literature of fortification went on to the form the core of an emergent field known as urban planning).

In another 50, 100, or even 500 years, then, will there be a defensive literature of the feral city, its systematic description, techniques for its defense (or obliteration), and its urban logic (or lack thereof)? Even if only on the level of urban form, this would be a fascinating journey, going from Castriotto’s and Maggi’s indirect streets to whole cities gone wild in the name of resisting outside intervention.

FERAL ZONES
http://www.nytimes.com/2004/12/12/magazine/12FERAL.html
http://www.usni.org/magazines/proceedings/archive/story.asp?STORY_ID=1695
http://www.worldpolicy.newschool.edu/journal/articles/wpj04-1/liotta.htm
Redrawing the Map of the Future
by P. H. Liotta and James F. Miskel / Spring 2004

When the Cold War ended, scholars, pundits, and policymakers turned to the task of defining the new world order and America’s place in it. Some warned of coming anarchy or of the clash of civilizations. After September 11, those warnings seemed prescient. Since 9/11, our sense of insecurity has only increased, as has our reliance on military solutions to the problems we see before us. Yet the more we rely on military force, the less secure we feel. Perhaps the difficulty is in how we see the world that confronts us. It is as if we are trying to find our way using an old map, only to discover that the roads marked no longer exist.

One new map that may be particularly useful in helping us to see the contours of the future is the “earthlights” image reproduced here and available on the National Aeronautics and Space Administration’s website. The image is a composite of satellite photographs taken over a period of months that recorded the illumination from city lights, producing, according to NASA, a unique measure of “the spatial extent of urbanization.” The earthlights map forces us to think about some disturbing trends and effects that, if left unchecked, will likely come to haunt us in the coming decades. These developments, broadly considered here, are: the changing demographics of cities, particularly in what we call the Lagos-Cairo-Karachi-Jakarta arc; the increased possibility of failing regions within functioning but troubled states; and the rise of the “feral city” in states and regions inextricably linked to the process of globalization.

As one looks at the earthlights image, patterns of world order and disorder begin to emerge, and it becomes clear that tectonic forces are at play in the globe’s physical, economic, cultural, and political geography. The patterns of light suggest the inevitability of Central and Eastern Europe drawing ever closer, like moths to a flame, toward an enlarging European Union. Likewise, North Africa is being pulled away from the rest of Africa—and from the Middle East, despite certain cultural ties—and drawn toward a larger Euro-Mediterranean community. The earthlights image is revealing in other ways as well. It is interesting to see that India and Pakistan, which began from relatively equal starting points at partition in 1947 have gone in radically different directions: all of India is lit, while Pakistan is dark. The same story is evident on the Korean peninsula, where the thirty-eighth parallel forms a dramatic dividing line between the lights of South Korea and the dark shadow that is North Korea. The lights in the People’s Republic of China are clustered in the east, along the country’s Pacific coast, not evenly distributed throughout the country as in Taiwan or Japan. This suggests the eventual formation of “two Chinas”—one consisting of ever more densely populated urban zones, the other of underdeveloped and undergoverned hinterlands.

It is our view that we must pay greater attention to the shadows on the earthlights map. Like the drunk who loses his keys in the dark and looks for them under the streetlight because that is the only place he can see, we tend to focus our gaze on places where the lights are shining, even though the keys to greater security lie elsewhere. The attacks of September 11 not only revealed that Americans were vulnerable on their home soil; there also came the disturbing awareness that the new threat we faced came not from an enemy whose identity and capabilities were “in the light,” but from one operating from the shadows.

There now seems to be an emerging understanding that certain nontraditional security issues that have long plagued the so-called developing world—and which traditionally minded, state-centric strategists were content to consign to often ineffective nonstate entities (the United Nations, nongovernmental organizations, corporations)— have circled back to haunt us. This is not to say that traditional state-centric security problems are things of the past, or that military force will have no role to play. They are not, and it will, as the war in Iraq demonstrates. But the “boomerang” effect of these nontraditional security issues could increasingly affect the policy decisions and options open to the developed states. Our concern is that while the military is wrestling with the challenge of developing ever more impressive means of deterring and defeating “in the light” threats, no agency of government at the state or multi-state level (including the U.S. military) is doing enough to understand and overcome the threats that are taking shape in the shadowy and dark areas on the earthlights map.

Anarchy, governmental collapse, ethnic rivalry, cultural grievances, religious-ideo-logical extremism, environmental degradation, natural resource depletion, competition for economic resources, drug trafficking, alliances between narco-traffickers and terrorists, the proliferation of “inhumane weapons,” cyberwar, and the spread of infectious disease threaten us all. We cannot isolate ourselves from their effects. The question is not whether we should concentrate on traditional “hard” security issues, which normally derive from the relationships between states, or on “soft” nontraditional security issues, which are not confined by national boundaries. The answer is that we must focus on both.

As our understanding of security concerns broadens and deepens, the traditional assumption that states and governments are the sole guarantors of security will be increasingly challenged. This is because our security may depend on how we cope with the broader human dilemma. Addressing this dilemma will require sustainable development strategies and must take into account population growth, particularly in the emerging world; the rapid spread of epidemic diseases such as HIV/AIDS; the impact of climate change, including shifts in precipitation patterns and rising sea levels; water scarcity; soil erosion and desertification; and increased urbanization and the growth of “mega-cities” around the globe. In the Lagos-Cairo-Karachi-Jakarta arc over the next two decades, more and more people will be compelled by economic or environmental pressures to migrate to cities that lack the infrastructure to support rapid, concentrated population growth.

To take just one of these problems, most of the states in the Middle East are already experiencing water scarcity (some have per capita water availability rates that are significantly lower than the minimums recommended by the World Health Organization) and water resources will obviously be stressed even further as the population surges by a third between 2000 and 2015. This population growth in the Middle East will likely have a deleterious effect on nearby regions and perhaps the developed world. The combination of indigenous population growth and water scarcity will undoubtedly lead to pressures on the Middle East’s large number of guest workers to return home, often to countries with struggling economies, where jobs are scarce. The return home of guest workers will eliminate remittances (for some countries the value of remittances from overseas workers is greater than the state’s foreign aid receipts) and increase the number of individuals who will draw upon the home government’s already limited resources. The differences between Israel’s low natural population growth rate and the high rates in the West Bank and Gaza Strip as well as in neighboring Arab states mean that Israel will be demographically swamped unless it aggressively promotes immigration—the very thing that water scarcity (and terrorism) seem likely to discourage. It also suggests that however the Israeli-Palestinian confrontation is resolved, the real power struggle in the region may soon revolve around natural resources.

The Mega-City
Truly cataclysmic demographic changes will occur in the Lagos-Cairo-Karachi-Jakarta arc, with momentous shifts in the global landscape resulting from the “flocking” of people to urban centers. According to the National Intelligence Council’s Global Trends 2015: A Dialogue About the Future With Nongovernment Experts, as well as data compiled by the National Geographic Society and the United Nations Population Division, world population will reach 7.2 billion in 2015, up from 6.1 billion in 2000. Ninety-five percent of the growth will take place in “emerging” countries, and nearly all projected population growth will occur in rapidly expanding urban areas.

The population of the greater New York metropolitan area, which stood at 12 million in 1950, is projected to grow to 17.6 million in 2015. In comparison, Nigeria’s capital city of Lagos, which had a population of 1 million in 1950, is projected to have 24.4 million inhabitants by 2015. While the population of Los Angeles is projected to increase over the same period from 4 million to 14.2 million, Karachi’s population will explode from 1.1 million to 20.6 million. Cairo in 1950 was a city of 2.1 million; in 2015 it will have 14.4 million inhabitants. Jakarta’s population will have grown from 2.8 million to 21.2 million. Thus, the real cause for concern lies not in the developed world but in the “population belt” from Lagos to Jakarta.

Urbanization in and of itself is neither a good nor a bad thing. Tokyo’s population is projected to reach 28.7 million in 2015, but Tokyo will likely be far better equipped to handle the infrastructure requirements of the mega-city than the cities of the emerging world. Seventy-two percent of Japanese already live in cities, and Japan has accommodated itself to an urbanized existence. It is unlikely, however, that Lagos or Dhaka or Tehran will be able to sustain growth rates such as those projected above. Indeed, it is doubtful that many cities in developed states could sustain such rates of growth as cities in the emerging world are experiencing. If, for example, New York’s rate of growth were the same as Dhaka’s (the capital of Bangladesh will have a population of 19 million by 2015, up from 10 million in 2000, and from 400,000 in 1950), the (Really) Big Apple would have a population just shy of 600 million people by 2015. As it seems unlikely that even a city in the world’s richest country could handle such rapid growth, how will impoverished Bangladesh accommodate such a dramatic surge in the population of its capital city?

Compounding the problem is the fact that in numerous regions where U.S. interests are involved we will see the continued reality of a (threat-based) security dilemma along with the rise of various (vulnerabilitybased) human dilemmas. By 2015, the number of cities with a population of over 5 million will skyrocket from 8 (in 1950) to 58, and we may see more than 600 cities worldwide with populations in excess of 1 million inhabitants by 2015; in 1950, by contrast, there were only 86 such cities. As our colleague Richard J. Norton notes in the August 2003 issue of the Naval War College Review, many of the burgeoning cities of the future may well become petri dishes of instability, disease, and terrorism. In other words, at least some of these cities will grow far beyond the “natural” carrying capacity of their respective national governments, with the result that governmental infrastructure and public services will be stretched past the breaking point. Cities in this condition will pose a particularly serious security threat because they will have both substantial pockets of darkness within their municipal boundaries and extensive commercial, communications, and transportation links to the rest of the world. In other words, it will be easy for groups in these urban pockets of darkness to export instability.

Pockets of Darkness
The issue of state failure began to be widely discussed in the 1990s. Instead of the peace dividend that was the promise of the end of the Cold War, instability and a collapse of governance appeared to be on the rise. The “failed state” was seen as a breeding ground for anarchy and violence, and the natural home of terrorists, warlords, ethnic militias, holy warriors, criminal gangs, arms dealers, and drug merchants. Policymakers hoped that research into state failure might provide early warning indicators that would trigger timely international interventions to prevent collapse, and to this end the Central Intelligence Agency established the State Failure Task Force to conduct a comprehensive examination of the issue. (The task force developed a “failure” model, with a claimed predictive accuracy of 67 percent.) Yet, as events of the past few years have illustrated, there are other bubbling petri dishes that deserve greater attention—pockets of darkness in undergoverned areas within functional but struggling states.

The para-states that take shape in these pockets of darkness (for example, the war-lord-dominated “tribal areas” of Afghanistan and the militia-run enclaves in Bosnia and Kosovo) develop Night of the Living Dead characteristics. Possessing some of the functional aspects of statehood, but lacking the civic equivalent of balanced, flexible limbs, these figurative zombies stagger into the future, unable to function independently without massive and continuous life support—in the form of U.N. aid, or bilateral assistance from other states, or “export earnings” from various criminal enterprises. These para-states and lawless zones inside “nonfailing” states often present greater threats to international stability than do failed states. Examples include eastern Colombia where narco-terrorists have operated for years inside remote valleys; the “lawless” triangle where Brazil, Paraguay, and Argentina meet and where Hezbollah, arms dealers, and smugglers of all stripes conduct business freely; the hinterlands of the Democratic Republic of Congo, where opposing ethnic groups, invading armies, and gangs pillage the countryside and terrorize the people (albeit at a temporarily lower level of intensity since the U.N. intervention in 2003); and Afghanistan beyond the outskirts of Kabul and Kandahar.

Focusing on failed states may have caused us to pay insufficient attention to the possibility that undergoverned zones in remote rural areas—or the mega-cities on the Lagos-Cairo-Karachi-Jakarta arc—may pose a greater threat to developed states than do failed states. It is inevitable that feral zones will emerge in both the ungoverned outback and inside cities along the arc.

Further compounding the problem posed by rapid urban population growth is the “youth bulge” phenomenon. In the near future, almost half of the adult populations of many African, Middle Eastern, and Southwest Asian countries will be between the ages of 15 and 29. Despite the recent spate of Chechen and Palestinian suicide bombings by women, young men are responsible for most acts of violence. As the overall population grows, so too will the population of young males looking for employment and educational services. If, as seems likely in the emerging megacities of the arc, there are too few jobs and educational opportunities to satisfy the demand, discontent, crime, and urban instability will result.

Other pockets of darkness are also likely to form around semi-urbanized collections of “displaced” populations. Tens of millions of refugees now live in semi-permanent camps in the West Bank and Gaza, Sudan, and the Great Lakes region of Aftica. These veritable slums, with their swollen populations—where life is lived without opportunity or hope—are themselves evolving into para-states, fertile ground for instability. The only saving grace from a security viewpoint is that the displaced are typically not well connected by road, rail, or air to the rest of the world and thus will be less efficient exporters of violence to distant locations.

Finding a Way Out
In a world that is becoming more interconnected economically and physically, it is impossible to separate zones of light from pockets of darkness. Many of the states that will be most adversely affected by demographic pressures and rapid urbanization are already entwined in the globalization process and are simply too important to be left to their own devices. Egypt, Pakistan, and Indonesia fall into this category. They are struggling—though not failed—states whose stability, or lack thereof, will influence security and economic trends all along the arc of emerging mega-cities.

We need to encourage internal public sector reform and public security improvements in states where governments are currently failing to keep the lights lit, where urban population growth is likely to lead to failure at the municipal level or force overstretched governments to withdraw from remote rural areas. If September 11 taught us anything, it is that our security is inextricably connected to domestic governance shortcomings elsewhere. Unfortunately, the United Nations, by virtue of its own inefficiency, the divergent agendas of its leading members, and its orientation toward state-level solutions, is not up to the task of promoting effective public sector reform. A more flexible approach is called for. We need to better organize the efforts of all of the actors in the international community: governments, international organizations, international nongovernmental organizations, national civil society organizations, and for-profit corporations. As Jonathan Lash, president of World Resources Institute, has aptly put it, what we need is a “shift from the stiff formal waltz of traditional diplomacy to the jazzier dance” of issue-based networks and creative partnerships.

Future strategies must move beyond policing actions and military interventions toward active prevention of resource scarcity and governance failures. Active prevention was the central premise of the strategy of cooperative security, developed by former secretary of defense William Perry and others at the Brookings Institution shortly after the end of the Cold War. The idea was to prevent discontent from leading to internal armed conflict by creating jobs, reducing poverty, and improving governance—especially in urban areas—before aggrieved groups resort to violence. Our current strategy of preemptive war, of using the military to force regime change and then for nation building in sustained “governance stability operations”—in essence for “kicking the door in” and then “putting the door back on”—is ill-suited to the challenges ahead.

A few heretics (most notably, Robert D. Kaplan, the author of The Coming Anarchy) claim that development—not poverty— leads to unrest by raising expectations. The destabilizing effects of rising expectations are undeniable, but in this wired and interconnected world, expectations are likely to continue to rise no matter what national governments do. The destabilizing effects will be most dramatic in struggling states with overpopulated cities.

Unfortunately, the typical response to situations of such complexity is to do nothing. Yet, that cannot be our response. Our first order of business must be to promote a sense of urgency. Then we must devise approaches for radical improvements in public infrastructure and governance—particularly in the states and municipalities along the Lagos-Cairo-Karachi-Jakarta arc. If we are to redraw the map of the future, there must be a new division of labor among governments, international agencies, nongovernmental organizations, and corporations. Perhaps what is needed is the equivalent of the 1972 Stockholm Conference, which launched the global environmental movement and established the United Nations Environment Program as the environmental conscience of the world. Another example of an attempt to build new approaches to global problems was the U.N. Habitat II Conference, held in Istanbul in 1996. Neither of these initiatives was completely successful in mobilizing international support, but they represent useful starting points.

This is not an argument for supremacy by stealth or to justify future intervention. But unless we act to contain, if not reverse, the worrisome trends outlined here, we are likely to be in for decades of military engagement and increased insecurity. Rather than justifying intervention, we ought to be thinking about investment. When we look at the map of the lit and unlit world, we can see where work needs to be done.

{P. H. Liotta holds the Jerome E. Levy Chair of Economic Geography and National Security and James F. Miskel is associate dean of academics and professor of national security affairs at the U.S. Naval War College. The views expressed here are the authors’ own and do not represent those of the Department of the Navy.}

MEANWHILE : CONTEST to PRODUCE LIGHT
http://www.lightingafrica.org
http://lightingafricaconference.org/index.php?id=108&tx_mininews_pi1[showUid]=11&cHash=f3709743abb32487cfe52cc8677d5248
http://www.worldchanging.com/archives/011269.html

The five winners of the World Bank Group’s Lighting Africa 2010 Outstanding Product Awardswere recently announced:

MORE LIGHT PLEASE
http://www.nextbillion.net/blog/2010/05/20/killer-apps-at-lighting-africa-2010
by Nathan Wyeth / May 20, 2010
Looking for Killer Apps at Lighting Africa 2010

At the World Bank/IFC Lighting Africa Conference in Nairobi, some numbers are looking good for a change. There are still 1.6 billion people without access to electricity, but decreasing costs of solar panels and LED lighting have put individual solar-powered lamps at a price that is affordable for much of the base of the pyramid. Solar lantern distribution is projected to grow at 25-40% rates over the next 5 years in Africa.

Does this mean the path to modern energy for rural Africa is in clear view? I’m not sure it is, which is why when I’m meeting people at this conference sponsored by the IFC’s Lighting Africa program, I’m saying that I’m still looking for killer apps. Engineering better, cheaper products is often a process of putting one foot in front of the other, but distributing them will require side-stepping the barriers that solar energy has continually run up against at every price point.

And even if the goal is defined as lighting for Africa, lighting products themselves may not be the best starting point or a standalone approach, as opposed to more comprehensive platforms for energy access – laying the groundwork to go from portable pico-power retail products to household and community scale energy distribution, in terms of both business infrastructure and customer readiness/ability.

Even at these huge projected growth rates that are probably as much as any single product distribution company can handle, Gaurav Gupta of Dalberg Development Advisors is quick to point out that over 5 years, that will take solar lighting market penetration in Africa from an estimated 1.3% to an estimated 2.3%. So I am on the lookout for approaches that will also open up whole new horizontal growth and distribution in this sector.

I’m not sure I’ve found the killer apps here just yet, but there are promising new ideas floating around, some embodied in new start-ups operating in Africa. Here are a few things that I’m looking for:

– Defining and increasing the value of solar by linking to income and tangible payback. There is generalized information available on what people currently pay for kerosene lighting, but very fuzzy understanding of actual willingness to pay for new energy products – and this may reflect unclear marketing and product positioning as much as lack of data collection.

Anecdote-based discussion is unfolding at this conference about whether end-user financing is necessary for solar lighting products that cost anywhere from $10-50, illuminating the fact that while product designers have been focused on a combination of lighting price and quality, there’s no clearly established understanding of what people will pay for modern lighting at what income levels.

What is clear is that payback and specific utility matters more than price. For example, Barefoot Power is having great success with its Firefly 12 product – not the least expensive in its line – because this can charge mobile phones. If solar is linked to specific utility, or payback for lighting is clearly defined, customers will be able to tell retailers what they will pay for it and the supply chain will be able to adjust accordingly.

– Building customer relationships. What makes solar attractive as an energy source makes it more difficult as a retail product – if you do a good job with your lamp product you won’t see your customers again for a few years and they won’t need to buy a single thing from you until they’re ready for a second lantern. But as a new technology, solar product companies need to develop intense technology loyalty and evangelism and probably need to be focused as much on reselling to existing customers and finding new ones. How to stay connected to customers who hopefully won’t have to talk to you more than once ever few years?

Companies that offer energy as a service might begin by suppling rechargeable battery stations that can power a home’s electricity need, but could then build on this by installing distributed power generation with the same customers at a much lower cost of acquisition and much greater readiness to install and value a household solar system.

– Building distribution and maintenance platforms. As alluded to above, electricity is a unique product. It’s only useful in tandem with other products, and some certainty of supply is needed before those products become worth it.

Distribution platforms offer the opportunity to meet energy needs beyond lighting – both in terms of energy supply and the appliances that can be linked specifically to distributed energy generation. For example, an energy efficient fan is valuable when it can be linked to a reliable energy supply, and solar panels gain in value when they can power an energy efficient fan. I would love to find an energy company that could sell both to a household in tandem.

In places with even more constrained ability to pay for energy services, a village energy vendor who recharges phones or LED lamps from a solar array can become a future distributor of products and the village expert in repairing solar panels.

These ideas are peeking through the cracks here at Lighting Africa, but perhaps by default, disruptive ideas are not an easy fit for this kind of forum, focused specifically on delivering lighting. Development banks operate on a programmatic basis, with certain starting points, end points, and program strategies in between. A focus on lighting markets – rather than energy markets – is one such construct that I’m not sure is helping here. Within this, the IFC is focusing on product quality. I can’t disagree with supporting high quality lighting products, but this presupposes that retail solar lantern distribution is actually the first step that you want for electrifying Africa. Disruptive approaches may pop up here but will go against the grain.

Battery re-charge subscription services, income-generating village energy vending opportunities, and technology-agnostic energy retail chains are among the disruptive and promising approaches that I’m seeing here. Mobile communications and payments can and will be wrapped into effective approaches – they may become killer apps in themselves. And as one persuasive participant said towards the end of the conference, when solar companies get as smart at marketing at Safaricom has in Kenya, these products will find their way into customers’ hands. This sector is moving fast but the clear winners have yet to emerge.

RESOURCE ECONOMY
http://www.thevenusproject.com/a-new-social-design/essay
http://www.thevenusproject.com/a-new-social-design/resource-based-economy

The term and meaning of a Resource-Based Economy was originated by Jacque Fresco. It is a system in which all goods and services are available without the use of money, credits, barter or any other system of debt or servitude. All resources become the common heritage of all of the inhabitants, not just a select few. The premise upon which this system is based is that the Earth is abundant with plentiful resource; our practice of rationing resources through monetary methods is irrelevant and counter productive to our survival.

Modern society has access to highly advanced technology and can make available food, clothing, housing and medical care; update our educational system; and develop a limitless supply of renewable, non-contaminating energy. By supplying an efficiently designed economy, everyone can enjoy a very high standard of living with all of the amenities of a high technological society.

A resource-based economy would utilize existing resources from the land and sea, physical equipment, industrial plants, etc. to enhance the lives of the total population. In an economy based on resources rather than money, we could easily produce all of the necessities of life and provide a high standard of living for all.

Consider the following examples: At the beginning of World War II the US had a mere 600 or so first-class fighting aircraft. We rapidly overcame this short supply by turning out more than 90,000 planes a year. The question at the start of World War II was: Do we have enough funds to produce the required implements of war? The answer was No, we did not have enough money, nor did we have enough gold; but we did have more than enough resources. It was the available resources that enabled the US to achieve the high production and efficiency required to win the war. Unfortunately this is only considered in times of war.

In a resource-based economy all of the world’s resources are held as the common heritage of all of Earth’s people, thus eventually outgrowing the need for the artificial boundaries that separate people. This is the unifying imperative.

We must emphasize that this approach to global governance has nothing whatever in common with the present aims of an elite to form a world government with themselves and large corporations at the helm, and the vast majority of the world’s population subservient to them. Our vision of globalization empowers each and every person on the planet to be the best they can be, not to live in abject subjugation to a corporate governing body.

Our proposals would not only add to the well being of people, but they would also provide the necessary information that would enable them to participate in any area of their competence. The measure of success would be based on the fulfilment of one’s individual pursuits rather than the acquisition of wealth, property and power.

At present, we have enough material resources to provide a very high standard of living for all of Earth’s inhabitants. Only when population exceeds the carrying capacity of the land do many problems such as greed, crime and violence emerge. By overcoming scarcity, most of the crimes and even the prisons of today’s society would no longer be necessary.

A resource-based economy would make it possible to use technology to overcome scarce resources by applying renewable sources of energy, computerizing and automating manufacturing and inventory, designing safe energy-efficient cities and advanced transportation systems, providing universal health care and more relevant education, and most of all by generating a new incentive system based on human and environmental concern.

Many people believe that there is too much technology in the world today, and that technology is the major cause of our environmental pollution. This is not the case. It is the abuse and misuse of technology that should be our major concern. In a more humane civilization, instead of machines displacing people they would shorten the workday, increase the availability of goods and services, and lengthen vacation time. If we utilize new technology to raise the standard of living for all people, then the infusion of machine technology would no longer be a threat.

A resource-based world economy would also involve all-out efforts to develop new, clean, and renewable sources of energy: geothermal; controlled fusion; solar; photovoltaic; wind, wave, and tidal power; and even fuel from the oceans. We would eventually be able to have energy in unlimited quantity that could propel civilization for thousands of years. A resource-based economy must also be committed to the redesign of our cities, transportation systems, and industrial plants, allowing them to be energy efficient, clean, and conveniently serve the needs of all people.

What else would a resource-based economy mean? Technology intelligently and efficiently applied, conserves energy, reduces waste, and provides more leisure time. With automated inventory on a global scale, we can maintain a balance between production and distribution. Only nutritious and healthy food would be available and planned obsolescence would be unnecessary and non-existent in a resource-based economy.

As we outgrow the need for professions based on the monetary system, for instance lawyers, bankers, insurance agents, marketing and advertising personnel, salespersons, and stockbrokers, a considerable amount of waste will be eliminated. Considerable amounts of energy would also be saved by eliminating the duplication of competitive products such as tools, eating utensils, pots, pans and vacuum cleaners. Choice is good. But instead of hundreds of different manufacturing plants and all the paperwork and personnel required to turn out similar products, only a few of the highest quality would be needed to serve the entire population. Our only shortage is the lack of creative thought and intelligence in ourselves and our elected leaders to solve these problems. The most valuable, untapped resource today is human ingenuity.

With the elimination of debt, the fear of losing one’s job will no longer be a threat This assurance, combined with education on how to relate to one another in a much more meaningful way, could considerably reduce both mental and physical stress and leave us free to explore and develop our abilities.

If the thought of eliminating money still troubles you, consider this: If a group of people with gold, diamonds and money were stranded on an island that had no resources such as food, clean air and water, their wealth would be irrelevant to their survival. It is only when resources are scarce that money can be used to control their distribution. One could not, for example, sell the air we breathe or water abundantly flowing down from a mountain stream. Although air and water are valuable, in abundance they cannot be sold.

Money is only important in a society when certain resources for survival must be rationed and the people accept money as an exchange medium for the scarce resources. Money is a social convention, an agreement if you will. It is neither a natural resource nor does it represent one. It is not necessary for survival unless we have been conditioned to accept it as such.

‘AGRICULTURAL URBANISM’
http://www.houstontomorrow.org/initiatives/story/agricultural-urbanism/
http://lawprofessors.typepad.com/land_use/2009/10/duany-on-agricultural-urbanism.html
http://www.cnu.org/search/projects
http://www.dpz.com/transect.aspx
http://smartcodecentral.com/smartfilesv9_2.html

LEISURE-BASED 1st WORLD LAND USE
http://vimeo.com/7240892

DOWNSIZING : CLEVELAND RAZED to GROW FORESTS
http://money.cnn.com/2010/06/25/news/companies/fannie_freddie_foreclosure_downsize.fortune/index.htmmega
Cleveland razed! Rust Belt remaking foreclosures into forests
by Nin-Hai Tseng / June 25, 2010

In a housing market still struggling to regain strength, Fannie Mae and Freddie Mac have quickly become two of the nation’s biggest landlords. By the end of March, the troubled mortgage finance companies had taken over 163,828 foreclosed houses. That’s more homes than there are in Seattle. In hopes of recouping some losses, Fannie and Freddie are working to sell the houses. In a healthy housing market, that makes sense. But they wouldn’t be in this predicament if that were the case. We’re still grappling with the same housing problems: too much supply, not enough demand.

How can the nation downsize with grace?
A growing chorus believes turning foreclosed homes into wide-open spaces — neighborhood parks, community gardens, or even urban forests — is the way to do it. It’s not exactly a far-fetched idea. Fortune has learned The Trust for Public Land, a national nonprofit land conservation organization, is examining Wells Fargo’s (WFC, Fortune 500) portfolio of foreclosed homes to buy tracts in order to return the land to a greener state. Record foreclosures and lower land prices has created some unlikely opportunities — what the organization is calling a “green lining” to the real-estate crash. “We’ve always worked with banks to acquire properties, but obviously there’s a lot more pieces and much more opportunities these days,” said Will Rogers, president of The Trust for Public Land, which help governments put together financing to acquire lands through grants, public dollars and private fundraising. For decades American cities such as Cleveland, Detroit, Youngstown, and St. Louis have responded to everything from white flight to population decline by converting abandoned lots or properties into plots for public uses. To be sure, not every structure has been demolished and turned into greener spaces. Some in good shape have been transformed into affordable housing, but creating open space has become a viable option for cities trying to shrink prosperously.

Conservation of land has its roots in the presidency of Theodore Roosevelt. In keeping with the spirit of our late President, known as the Father of Conservation and a crusader for saving wild places, the idea of turning unneeded homes into green space is worth exploring. Roosevelt helped create 150 national forests, five national parks, and 18 national monuments, among other conservation projects. Altogether, he was instrumental in the conservation of about 230 million acres. “Roosevelt is famous for being a conservationist — he was onto this idea that the great outdoors built strong Americans,” says Armando Carbonell of the Lincoln Institute of Land Policy, a Cambridge, Mass.-based policy research organization. “The amount of failure of real estate projects is so great that there are probably a lot of opportunities out there.”

In 2008 the federal government seized Fannie and Freddie because they were deeply troubled by bad loans. The companies hold titles to the foreclosed properties, and have hired real estate and marketing agencies to help sell their inventory. When a property is sold, the companies take payment and give the new homeowners title. As of the end of March, Freddie had taken over 53,831 homes, mostly concentrated in states with some of the nation’s highest foreclosure rates: California, Florida, Arizona, Michigan, Illinois, and Georgia. Listings for homes in California ranged from $19,000 to $59,000; those in Florida, $5,000 to $24,000; in Illinois, $2,000 to $36,000; in Arizona, $15,500 to $37,500; in Michigan, $100 to $19,900; and in Georgia, $4,000 to $31,000.

The weak housing market has kept Freddie from selling at prices that would help it recoup all its losses. On average, the recovery rate has been approximately 60%, said Brad German, a spokesman for Freddie. Clearly there are few winners in this nightmarish housing market. No doubt there’s a better way: Freddie and Fannie need to be part of the solution. The companies could sell their properties to governments or a land trust, which could then turn them into neighborhood parks or urban gardens or some form of open space. Not every piece will work.

Location, location, location
The Trust for Public Land prefers homes it is looking at to sit in a neighborhood that does not already have a park or green space. However, if the foreclosed parcel is located adjacent to an existing park, it could be added into it. Finding a willing government, church, school or organization to maintain the open space is also important. Efforts to turn foreclosures into green space could prove economically beneficial, helping reduce the nation’s oversupply of homes. In turn, this could support and possibly raise home prices.

In Ohio’s Cuyahoga County, home to the rust-belt city of Cleveland, momentum has increased to ease the area’s rampant foreclosures through a greener approach. In April the county of about 1.3 million launched a land bank, an independent government corporation with the power to acquire tax-foreclosed properties or buy up discounted structures from banks or loan services. The agency is a variation on a handful of land banks that have formed nationwide — the first of which emerged in the 1970s in St. Louis, where residents’ flocking to the suburbs left an inventory of empty homes and buildings.

Unlike land banks of the past, Cuyahoga’s agency appears to have teeth. Not only can the land bank pick up vacant property, but it can also acquire homes, buildings, and other structures. The county apparently has received an outpouring of requests from a public that envisions greenhouses, parks, trails, and community gardens, in hopes of redefining neighborhoods left hollow by subprime lending and mortgage foreclosures. But not every parcel or property should be demolished and turned into wide-open spaces. Affordable housing is still in demand, and many communities dealing with record foreclosures would probably benefit more from attracting new industries and more businesses. Local and state governments dealing with budget shortfalls would probably rather see new homes or a new office park on their tax rolls, leading to increased government revenues from property taxes. State governments face one of the worst budget seasons in years. Between now and 2012, states must still close budget gaps totaling about $127 billion, according to a survey by the National Association of State Budget Officers. If market demand for homes just isn’t there and the location is right, communities could find even more value in greener spaces. “It suddenly becomes an asset for the community rather than a liability,” says Frank Alexander, a professor at Emory University Law School who has helped form land banks in Atlanta and Michigan’s Genesee County.

The green space effect
In 2007, Philadelphia saw an $18.1 million windfall in property taxes because property values rose in certain residential areas near parks, according to a 2008 study by The Trust for Public Land. What’s more, parks attract tourists. Philadelphia collected $5.2 million worth of sales tax from tourism spending by out-of-towners who visited the city primarily for its parks, according to the report. If anything, open spaces might just add to life’s simple pleasures. A separate survey by The Trust for Public Land has found that the economic downturn has occasioned more visitors to free parks and playgrounds, while admissions to paid events, like professional sports, have gone down. In a 2009 poll, 38% of adults with children under 6 years old said they’ve made greater use of parks.

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http://thehill.com/blogs/hillicon-valley/technology/101273-john-perry-barlow-internet-has-broken-political-system
John Perry Barlow: Internet has broken political system
by Gautham Nagesh / 06/03/10

“The political system is broken partly because of Internet,” Barlow said. “It’s made it impossible to govern anything the size of the nation-state. We’re going back to the city-state. The nation-state is ungovernably information-rich.” Speaking at Personal Democracy Forum in New York on Thursday, Barlow said there is too much going on at every level in Washington, D.C., for the government to effectively handle everything on its plate. Instead, he advocated citizens organizing around the issues most important to them.

Barlow also said that President Barack Obama’s election, driven largely by small donations, has fundamentally changed American politics. He said a similar bottom-up structure is needed for governing as well. “It’s not the second coming, everything won’t get better overnight, but that made it possible to see a future where it wasn’t simply a matter of money to define who won these things,” Barlow said. “The government could finally start belonging to people eventually.”

The former Grateful Dead songwriter said those disppointed in Obama are disregarding the extent to which the political system is broken. He blamed the Beltway establishment, which he said is loathe to give up any accumulated influence. “There is a circle of fat around the Beltway that is incredibly thick” Barlow said. “We can no longer try to run this country from the center. We’ve got to run it, just like the Internet, from the edges.”

A longtime advocate of individual’s rights online, Barlow also had some harsh words for the world’s leading search firm. “Google’s capacity to control human thought makes the Catholic church jealous, I bet,” Barlow said. “They wish they’d thought of it.” Despite his concerns, Barlow remains optimistic about the Internet’s ablitity as a force for good in politics, describing himself as a techno-utopian. “There are lots of battles to be fought, we can’t give them up,” Barlow said. “You folks in this room have the capacity to be some of the greatest ancestors anybody ever had.”